This article is accurate for returns filed through tax year 2017. Under the Tax Cuts and Jobs Act, some of the laws mentioned changed beginning in 2018. Learn more about the updated tax laws enacted under the Tax Cuts and Jobs Act here.
Many taxpayers are surprised to learn that they can deduct certain expenses related to their job.
If you plan on deducting expenses related to your job—whether you’re a regular employee, self-employed, a freelancer, or working a second job—you’ll need the documents and receipts that show all income, expenses, or transactions related to those deductions. The key here is good record-keeping so that you can take advantage of every deduction you’re entitled to.
Here are some general notes to keep in mind as you prepare for tax season.
If you have a second job
Maybe you work most of the day at a bank (your primary full-time job). Then, some evenings you drive straight to another job at a restaurant (your second part-time job). Travel-related costs between the bank and the restaurant are tax deductible, but not from the restaurant to your home.
Let’s say you took the day off from your primary job at the bank, but you still drove to your second job. You can’t deduct any travel-related expenses from your home to your second job.
Keep receipts and logs of vehicle-related expenses like car repairs, oil changes, gas, car loan interest, and mileage. When it comes time to deduct, you’ll choose between a standard mileage rate and your actual expenses.
If you’re a teacher
Because teaching supplies and resources are limited, many teachers end up paying out of pocket for teaching aids, like books and software. For this reason, teachers working in public or private schools teaching K–12 are eligible to deduct qualified expenses (up to $250 per teacher) that they paid out of pocket.
If you move to a new home because of your job
If you move to a new home during the year, you may be able to deduct many of the moving costs if you meet all the following requirements:
- your move is closely related to the start of work
- pass the distance test
- pass the time test
Refer to the instructions on Form 3903 for specifics.
If you work at home
Let’s say you use part of your home—your den—for your photography business. In this case, you may be entitled to a deduction if you use part of your home.
- exclusively and regularly as your primary place of business;
- on a regular basis for storage (conditions apply); or
- as a daycare center
But if you work at home as an employee (that is, you are not self-employed),
- your business use must be for the convenience of your employer, and
- you must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer
If you travel for your job
If you travel for your job, some costs related to that travel may be deducted, as long as your employer did not reimburse you for those expenses.
Here are some qualifying travel expenses:
- parking fees
- bus, taxi, shuttle transportation, etc.
- hotel accommodations
- car rental
- food and entertainment
You can even deduct expenses for the business use of your automobile (such as mileage).
If you’re self-employed
If you’re self-employed generally you can deduct the following costs on your tax return:
- home office
- food and entertainment
- office supplies
- business asset depreciation
Other expenses considered “ordinary” and “necessary” for your job may also be deducted. Ordinary means that it’s a common and accepted expense for your job. Necessary simply means that the expense is helpful and appropriate.
For example, a ballet instructor needs his or her own pair of ballet shoes in order to teach, which is an “ordinary” expense.
Here are some other job-related expenses:
- safety gear required to do your job, such as hard hats, appropriate shoes, and glasses/goggles
- physical examinations required by your employer
- dues to professional organizations and chambers of commerce
- subscriptions to professional journals
- fees to employment agencies and other costs related to your job search, while you’re in your present occupation, even if you don’t get a new job
- certain business use of part of your home (refer to IRS Publication 587)
- educational expenses described in the most recent version of IRS Publication 970
No matter your job situation, we want you to capture every deduction you’re entitled to. TaxSlayer can help you do that. Every TaxSlayer product—including Simply Free—features a deduction finder to ensure you save money and get the maximum refund.
Handy IRS Resources: