12/31/2020
Some Employees May Still Qualify to Deduct Business Expenses – Did You Know?
The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the tax deduction for business expenses for most workers classified as employees. However, some employees may still qualify for a deduction by filing the proper form with their federal tax returns.
Eligible school employees may claim the Educator Expense Deduction for up to $250 of unreimbursed expenses necessary for their work, such as classroom supplies. Qualifying for this deduction generally requires working for at least 900 hours a year as a teacher, principal, counselor or classroom aide at an elementary or secondary school.
In addition, employees in the following categories may qualify to deduct business expenses:
- Armed Forces reservists, that is, members of the Army and Air National Guards, along with members of the Army, Navy, Air Force, Marine Corps and Coast Guard Reserves
- Qualified performing artists classified as employees, such professional dancers, actors and musicians employed by professional companies
- State and local government officials categorized as “fee-basis” workers (typically, these officials must pay self-employment tax)
- Employees with work expenses related to a physical or other impairment
These employees may be eligible to deduct unreimbursed “ordinary and necessary” costs related to carrying on their business as employees. Qualifying expenditures might include travel, costumes, workspace adaptations or office supplies.
A professional tax advisor can help you determine whether you qualify to deduct business expenses as an employee, and which forms you must file in order to do so.
