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Form 2106-EZ: Unreimbursed Employee Business Expenses

Definition

Form 2106-EZ: Unreimbursed Employee Business Expenses is a simplified version of IRS Form 2106, used by employees to deduct ordinary and necessary expenses related to their jobs that their employers have not reimbursed. These can include travel, meals, or entertainment expenses related to work. It is important to note that as of tax year 2018, unreimbursed employee expenses are no longer deductible for most taxpayers due to the Tax Cuts and Jobs Act.

Phonetic

Form 2106-EZ: Unreimbursed Employee Business ExpensesPhonetically, this can be pronounced as: “Form two-one-zero-six-E-Z: Un-reimbursed Employee Business Expenses.” Here’s the phonetic breakdown:Form = /fɔːrm/two-one-zero-six = /tuː-wʌn-ziərō-sɪks/E-Z = /iː-zɪ/Unreimbursed = /ʌn-rɪˈɪmbərst/Employee = /ɛmplɔɪˈiː/Business = /ˈbɪznɪs/Expenses = /ɪkˈspɛnsɪz/

Key Takeaways

  1. Eligibility: Form 2106-EZ is used by employees who have incurred business expenses that were not reimbursed by their employer. This includes costs related to traveling, transportation, meals, entertainment, gifts, and usage of a home office. It is important to note that only a select group of employees qualify to use this form after changes in the law made by The Tax Cuts and Jobs Act.
  2. Necessary Details: Employees using Form 2106-EZ will need to provide exact details about their unreimbursed business expenses, including dates, locations, business relationship details, and the specific nature of the expenses. Accurate record-keeping is a must for properly filling this form. Receipts, bills, cancelled checks, and other documentary proofs should be kept handy.
  3. Calculation of Deductions: The form requires you to calculate your deductible expenses. To do so, you may have to separate your expenses into categories like travel and meals, then subtract any amounts that were reimbursed by your employer. The resulting figure is used when completing Schedule A of your tax return, provided that you’re eligible to itemize your deductions.

Importance

Form 2106-EZ: Unreimbursed Employee Business Expenses is a crucial term in business/finance as it represents a specific tax document used by employees in the United States to deduct ordinary and necessary expenses they have paid for that weren’t reimbursed by their employer. These include expenses related to work such as traveling or using your car for work-related assignments. Thus, it plays a vital function in reducing an employee’s taxable income, therefore lessening their tax burden. However, following the Tax Cuts and Jobs Act of 2017, most employees can no longer claim unreimbursed employee expenses as deductions unless they fall into specific categories like armed forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses.

Explanation

The purpose of Form 2106-EZ: Unreimbursed Employee Business Expenses, is to provide a framework for employees to record and calculate expenses incurred during the performance of their jobs that have not been reimbursed by their employer. These could be various expenses related to the job such as travel, accommodation, meal expenses, or use of a personal vehicle for business. This form enables employees to itemize these expenses and potentially deduct them from their taxable income, given they meet certain IRS criteria.Form 2106-EZ is designed to track these expenses systematically. Important to note, however, only a portion of these expenses may be deductible, reliant on income level, and the specific regulations from the IRS. The aim is to prevent employees from having to shoulder too much of the financial burden of business expenses, which is essential to creating a fair working environment. Ultimately, form 2106-EZ acts as a way for individuals to reduce their overall tax liability.

Examples

1. Salesperson Travel Expenses – Suppose Jamie is a salesperson whose job involves traveling extensively to client sites for presentations. While her company pays for major expenses like airfare and hotel rooms, smaller costs like meals, parking fees, or local commuting costs are not reimbursed. These extra out-of-pocket costs that directly relate to her work could be reported in Form 2106-EZ as unreimbursed employee business expenses.2. Required Uniforms – Consider Mike, a delivery driver for a private delivery service that requires him to wear a specific uniform. However, his company does not cover the cost of purchasing or maintaining this uniform. So, Mike incurs cleaning charges and has to periodically replace items of clothing. These are valid examples of unreimbursed employee business expenses that Mike could report on Form 2106-EZ.3. At-home Office Supplies for Teachers – Say Sarah is a public school teacher who often purchases additional supplies for her students out of her own pocket: crayons, paper, boards, etc. The school district doesn’t reimburse these expenses, so Sarah can note these necessary work-related purchases on Form 2106-EZ under unreimbursed employee business expenses. Remember that rules regarding these deductions may vary year by year, and have specific criteria that must be met. Please consult with a tax professional or visit the official IRS website for the most accurate information.

Frequently Asked Questions(FAQ)

What is Form 2106-EZ: Unreimbursed Employee Business Expenses?

The Form 2106-EZ: Unreimbursed Employee Business Expenses is a document used by U.S. taxpayers to report expenses related to their jobs that their employers did not reimburse.

Who is entitled to use Form 2106-EZ?

Form 2106-EZ is generally used by employees who are eligible to claim a deduction for expenses incurred while being an employee.

What types of expenses can be reported with Form 2106-EZ?

This form can be used to report expenses such as travel, meals, entertainment, gifts, and transportation related to your employment.

Where can I find Form 2106-EZ?

The Form 2106-EZ can be downloaded directly from the official IRS website.

How to fill out Form 2106-EZ?

Form 2106-EZ requires information about your expenses such as amount spent, purpose, date, and location. It is important to have proof of these expenses, like receipts, in case of an audit.

Can I file Form 2106-EZ electronically?

Yes, Form 2106-EZ can be filed electronically with your income tax return using tax software, or through a tax professional.

What is the deadline to file Form 2106-EZ?

This form should be attached to your tax return, so it should be filed by the regular income tax filing deadline, which is typically April 15.

What happens if I don’t file Form 2106-EZ?

If you fail to file Form 2106-EZ, you might not be able to claim your unreimbursed business expenses, which might increase your taxable income and the amount of tax you owe.

Are there any prerequisites for filing Form 2106-EZ?

You need to ensure that your employer did not reimburse the expenses and the expenses are ordinary and necessary in your line of work. Also, the expenses should be greater than 2% of your adjusted gross income.

Related Finance Terms

  • Unreimbursed Employee Expenses: These are expenses an employee has paid that they did not receive payment or reimbursement for from their employer. These expenses are usually related to their job responsibilities.
  • Itemized Deductions: Expenses that taxpayers are allowed to deduct from their adjusted gross income to reduce their taxable income. Unreimbursed Employee Business Expenses is one of these deductions.
  • Form 1040 Schedule A: This is the IRS tax form where an individual would report itemized deductions, including any unreimbursed employee business expenses.
  • Tax Deductible Expenses: These are expenses that can be subtracted from an individual’s taxable income, thus reducing their overall tax liability. Unreimbursed Employee Business Expenses fall under this category.
  • IRS (Internal Revenue Service): The U.S. government agency responsible for the collection of taxes and enforcement of tax laws. They’ve issued the Form 2106-EZ to report Unreimbursed Employee Business Expenses.

Sources for More Information

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