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.

File your personal and small business taxes (Schedule C)