IRS Form 2106 | Employee Business Expenses

IRS Form 2106 is used to calculate the unreimbursed business expenses of W2 employees as they relate to their federal taxes. The list of qualifying deductions is quite extensive. They include automobile use as well as many other travel-related expenses, expenses related to your home office, educational expenses, trade publications, tax preparation and business–related gifts. Only those portions of these types of expenses that exceed 2% of your Adjusted Gross Income (AGI) are eligible for inclusion as deductions.

Part I of IRS Form 2106, lines 1 through 10, are for the final calculations of you unreimbursed business expenses. Vehicle expenses are entered into the left column of Line 1. If you have unreimbursed business vehicle expenses, you must look ahead Part II of IRS Form 2106 to calculate your vehicle expense before you can do proceed.

Non-overnight travel and overnight travel are entered into the left column of Lines 2 and Line 3, and totaled up in the left column Line 4. Meals and entertainment expenses are written into the right column of Line 5. Line 6 is a summary line, with the total of travel in the left side and the meals and entertainment in the right.

Then, write in the amount of these expenses that your employer did reimburse you for in the left and right columns of Line 7. Subtract the contents of the respective columns of Line 7 from those of Line 8 into the left and right sides of Line Eight.

The left column of Line 9 is the same as the left column of Line 8, but the content of the right side of Line 8, meals and entertainment expenses, is divided by half and entered into the right column of Line 9. Finally, both columns of Line 9 are added into Line 10.

Section A of Part II is where you break down you usage of you vehicle(s) into business expenses and personal miles; the latter, of course, are not relevant to tax calculations.

You then have a choice. You can opt to fill out Section B of Part II, which gives you a standard amount to multiply your business-related miles by to come up with a figure to use in Line 1.

Or, you can fill in out Sections C and D of Part II. Section C is a computation of actual vehicle expenses, which requires keeping detailed records of various operational costs. Section D is for calculating your vehicle(s)’ business related depreciation.

The results of either of these alternatives are entered into Line 1. Form 2106 is used in conjunction with Form 1040, and is submitted along with the 1040.