Employee Travel Expenses
If you're an employee, do not report travel expenses or reimbursements on your tax return if all four of the following conditions are met:
- You account to your employer for all your work-related expenses.
- Your employer fully reimburses you for your expenses.
- Your are required to return any excess reimbursement, and you do so.
- Your Form W-2 does not show an amount with a code "L" in box 12.
Employer Error In Reporting Travel Expense Reimbursement of Form W-2
If you meet all four of the above conditions and your employer still includes a reimbursement in your income on your Form W-2, have your employer issue you a corrected Form W-2.
Unreimbursed Travel Expenses
An employee's unreimbursed travel expenses may be reported on Form 2106 or 2106-EZ and deducted on Schedule A as a miscellaneous deduction.
Only the amount in excess of 2% of adjusted gross income is deductible.
Employee Accountable Plan
Since an employee's unreimbursed travel expenses are only deductible to the extent they exceed 2% of adjusted gross income, it may be better for an employee to report business-related expenses under an accountable plan.
Under an accountable plan an employee must substantiate all business-related expenses to his employer and does not claim business-related expenses on his tax return.
Reimbursements (or cash advances), where any excess cash must be (and is) returned to the employer, are not reported in the employee's Form W-2.
For Freelancers and independent Contractors
- Organize your financial data into one central accounting system on the cloud
- Software kept up to date.
- Your data kept secure
- Anytime, anywhere data access.
- Pay your quarterly estimated taxes online.
- Export Schedule C to TurboTax at year-end for faster filing.
- Save up to 50% off QuickBooks Self-Employed. Track every deduction! Start your free trial now!
Have an accounting or bookkeeping question? Email it to me.