Tax write-offs for employees

Many people think that because they are an employee they have nothing to write off come tax time. They know that if they were self employed they would have all sorts of tax write offs, but are not taking advantage of the ones available to them. This is usually because of ignorance. Lessening your tax liability is often dependent on knowing what write-offs you are eligible to take. The following is an overview of what tax write-offs are available for employees. As with any financial issue, it is important that you consult a financial professional for the specifics of your tax liability, as your situation is unique to you. When you are employed, and you are looking to write things off you have to follow the 2% rule. This is a rule that basically says that since most employee business expenses are considered miscellaneous expenses, you can only deduct expenses that exceed 2% of adjusted gross income. This, if your AGI is $75,000, for example, the first $1,500 of miscellaneous expenses are not deductible. It is because of this that many people do not even bother to keep track of their potential write-offs, but this is a mistake, if you take advantage of all the potential write offs available you could exceed 2% and find yourself getting a deduction after all. In addition to that, there are some write offs that are exempt from that rule, and that you can take either way.

Here is some information on things that qualify for tax write-off for employees, some go under the 2% rule, others do not-

Employer-provided fringe benefits can often be fully or partially nontaxable. These benefits commonly include cafeteria plans, child care expenses, education assistance, group-term life insurance, medical coverage and incentive stock options. These fringe benefits are benefits over and above your salary provided by your employer. These types of benefits also include accident and health plans or group-term life insurance. A fringe benefit that meets specified conditions may be fully or partially nontaxable only if it meets IRS requirements, even if your employer pays the entire amount. This means that even if the value of a fringe benefit is included in your taxable income, you can still come out ahead. Be sure to check the following list to determine if you receive any of these benefits. After determining that you do check with your tax professional on the amount you are allowed to write off. Common employee benefits are:
1. Health savings accounts and cafeteria plans
2. Child care expenses
3. Driving a company-provided car
4. Educational assistance
5. Employee discounts for property or services
6. Employee stock purchase plans

7. Free parking
8. Group-term life insurance
9. Incentive stock options
10. Interest-free or bargain-rate loans
11. Meals and lodging
12. No-cost services-this can include use of employer facilities
13. Outplacement services
14. Employer-provided retirement plans
15. Stock bonuses or bargain purchases
16. Transit passes
17. Working-condition fringe benefits

• Other employment costs-In many cases there are things you have to have if you want to have a job. For example, a company may require that you have a cell phone if you are going to work for them. Anything you are required to have or purchase in order to have your job can be a tax write off. Some specific examples of such things include:

1. Computer or laptop: if you are using this computer or laptop for personal use as well it does not qualify as a write off.
2. Mobile phone: this only works if you are required to have it, and it is a separate line for business, not a personal phone that you happen to use for business.
3. Work uniforms: you can't write off your wardrobe because the guidelines say, "Work appropriate clothing," however, if your employer requires a specific article of clothing, such as "Black pants" then the purchase of those pants can be deducted.
4. Union dues and professional or trade association dues.

• Education- if you take classes or courses or other forms of education in order to better your position of further your knowledge in your current profession, and your employer does not reimburse you, you can usually write off the education expense. If you go to school to get a completely different degree, to get a better job, or take a class on something unrelated to your current job, you can't write it off. Conferences and course fees are all deductible, but only if you are not reimbursed by your employer.
• Job search- If you are looking for a new job within your current profession, you can write off any expenses that are part of that, this included employment agency fees, printing out your resume, resume building software, mailing expenses, travel for interviews (as long as the travel distance qualifies).
• Home office deductions-If your employer requires you have a home office, or if you have an area in your home dedicated exclusively to business, you could use the expenses of using an area of your home for business as a tax write off. If you have a home office only for convenience, it does not qualify. It has to be because your employer does not provide one. There are many drawbacks to using this as a deduction, but it can be beneficial if you use it right. For example, the deduction could save you a lot, or it could cost you more in the long run. So, talk to your tax professional before writing this off.
• Mileage- You can't write off the mileage to get to work and back, but if you are required to use your personal vehicle to run errands for work, attend meetings outside of work, or other such things, you can take a deduction of 48.5 cents/mile. You will need to keep track of those miles by writing them down, not with receipts, you have to document these.
• Entertainment- If your company does not reimburse for client-related entertainment expenses, you can usually write off half of the cost, but it has to be considered normal for your profession, and necessary. You can't just go golfing with a buddy and write it off if you would not normally need to do this for your profession.

•     Misc. job expenses-There is several kinds of expenses that would fall under this category. If your employer does not reimburse for ordinary and necessary expenses that you pay, you may be able to deduct the cost as a miscellaneous itemized deduction subject to the 2% adjusted gross income floor. Keep in mind that you cannot deduct the cost of any item for which you would have been reimbursed if you had asked for the reimbursement. These deductible expenses must be ordinary and necessary. An expense is considered ordinary if it is common and accepted in your trade, business or profession. An expense is considered necessary if it is appropriate and helpful to your business. It is important to note that an expense does not have to be required to be considered necessary.  These deductible expenses include the following:

1.    Bonding
2.    Physical examinations
3.    Office supplies not provided by your employer
4.    Professional or trade association dues
5.    Research, lecture and writing expenses
6.    Safety clothes and equipment
7.    Union dues
8.    Personal tools and equipment
9.    Travel, meal and entertainment expenses
10.    Computers and mobile phones
Consult with your tax professional for the correct way to report these expenses.

•    Business Travel-While the expense of your daily commute to work isn't deductible, if you find that you must travel to secondary or temporary locations (even within your metropolitan area) as part of your job and your employer does not reimburse you for that travel, those expenses may also be deductible. For example, if you go to your office to work, and are given an assignment that takes you elsewhere, that cost is deductible. In addition travel to and from a second job may be deductible. Business travel that takes you out of town is deductible including expenses such as your hotel room, meals, etc. (meals are usually only 50% deductible). If you have to get a passport to travel, the cost of obtaining one is deductible.
•     Moving- if you had to move more than 50 miles from your previous address for your job, any cost not reimbursed by your employer for getting you and your family, as well as your stuff to your new home is deductible.
•     Tools- if you have to purchase any special tools for your job, you can write them off. For example, a hair stylist can write off hair products, scissors, capes, etc. A carpenter could write off their tools like a hammer, saw, etc. Even a lawyer can write off things like their briefcase, as it is a tool for their profession.