Bureaucratus column: Consider deductions such as ordinary and necessary business expenses
The tax-filing season is coming up, and it's important to know what employee business expenses you can deduct on your tax return.
Many employee expenses that haven't been reimbursed can be counted as miscellaneous deductions if you itemize on Schedule A. As a fed, you're entitled, like other taxpayers, to deduct employee business expenses if they exceed 2 percent of your adjusted gross income. Some expenses that you may not have considered are any ordinary and necessary business expenses, training and education expenses, and job search expenses.
For an employee business expense to be deductible, it must be incurred in connection with your job and be an "ordinary and necessary" expense. An expense is "ordinary" if it is common and expected for the type of work you do; for example, a briefcase for an attorney. An expense is "necessary" if it is essential to the successful completion of your job.
Some examples of employee business expenses include:
* Dues to professional societies.
* Use of a home office for an employer's benefit (if the office is used regularly and exclusively for work).
* Medical examinations required by your employer (not very common for feds).
* Subscriptions to professional journals and trade magazines related to your work.
* Any supplies used in connection to your work (including software).
* Dues paid to belong to a union or similar organization.
If you have a computer or wireless phone that you use in connection with your work, it can be depreciated if it's used for the convenience of your employer and required as a condition of your employment. The "convenience of your employer" means your employer wants you to have the computer or wireless phone and tells you to get one or strongly urges you to get one even though he or she isn't willing to pay for it. It would be a good idea to get a memo from your supervisor to that effect before you deduct this expense.
The stipulation that the computer or wireless phone be "required as a condition of employment" means that you absolutely must have a computer or wireless phone in order to do your job. Someone who telecommutes would fall into this category if the employer didn't pick up the tab for the necessary equipment.
There are other areas to consider for potential deductions, too, such as training and education expenses and job search expenses. For instance, did you know that if you travel out of town to look for a new job in your present occupation, you could deduct travel expenses? For details on these and other deductions, see "A closer look at fed deductions."
Those are just some ideas that could help you trim your tax bill. If they sound like they apply to you, check with your accountant or tax adviser for advice.
Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He is also a certified internal auditor and a registered investment adviser. He can be reached at firstname.lastname@example.org.
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