Form 2106-EZ: Unreimbursed Employee Business Expenses

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

Form 2106-EZ: Unreimbursed Employee Business Expenses was a tax form issued by the Internal Revenue Service (IRS) for use by employees who wished to deduct ordinary and necessary expenses related to their jobs.

The Tax Cuts and Jobs Act (TCJA) eliminated virtually all of the deductions for unreimbursed employee expenses for most taxpayers. As a result, Form 2106-EZ: Unreimbursed Employee Business Expenses could no longer be used after the tax year 2017.

Important!

While 2106-EZ is no longer in use, the longer Form 2106 is still available for a few segments of the population who qualify for the deductions. These include Armed Forces reservists, performing artists, fee-based state and local government officials, and employees with impairment-related work expenses.

Key Takeaways

  • Form 2106-EZ was used by employees to deduct job-related expenses, including meals, hotels, airfare, and vehicle expenses.
  • This form was discontinued after 2018 after the Tax Cuts and Jobs Act repealed all unreimbursed employee expense deductions.
  • The full Form 2106 is still available but the deductions are available only to taxpayers in a few professions.

Who Could File Form 2106-EZ: Unreimbursed Employee Business Expenses?

Ordinary expenses were generally defined as expenditures that were common and accepted in a particular line of business. Necessary expenses are those that are required in order to conduct business.

Form 2106-EZ was a simplified version of Form 2106 and was used by employees who were claiming a tax deduction because of unreimbursed expenses related to their jobs.

An employee could only qualify for a deduction if the expense was not reimbursed by the employer. Employees who used this form were able to claim the standard mileage rate for vehicle expenses.

The Tax Cuts and Jobs Act repealed all unreimbursed employee expenses. Form 2106-EZ: Unreimbursed Employee Business Expenses was used only through the 2017 tax year.

How to File Form 2106-EZ: Unreimbursed Employee Business Expenses

The form was divided into two parts. Part I tabulated all employee business expenses, then calculated whether—and which—expenses were eligible for a tax deduction. Part II more specifically addressed vehicle expenses.

In Part I, employees were required to list all unreimbursed business expenses, such as airfare, lodging, parking, tolls, and car rental, as well as any personal vehicle expenses from Part II. So-called incidental expenses allowed a deduction for valet tips and other small cash transactions that don’t typically generate a receipt. Meals and entertainment were added separately because most taxpayers were only allowed to claim 50% of those expenses.

Another way to calculate overnight expenses was to use the General Services Administration (GSA) per diem rates for cities around the U.S. or, for foreign travel, the State Department rates for every country. Lodging rates could vary considerably by month, based on supply and demand in any given locality. For example, the GSA would allow a per diem lodging rate of $361 in Aspen, Colorado, during January 2020, but only $185 in September. The per diem meal rate for Aspen was listed as $76 for 2020.

When Vehicle Expenses Are Still Deductible

Part II addressed personal vehicle expenses, which must be claimed using the standard mileage rate. This entailed multiplying the IRS mileage rate for the tax year by the number of business-qualifying miles driven. The mileage rate factors in gasoline and repair expenses plus wear and tear on the average car.

The tax code still permits self-employed taxpayers to deduct the use of a personal vehicle for work-related purposes. For the 2020 tax year, the rate was set at 57.5 cents per mile. For the 2021 tax year, it dropped to 56 cents.

Taxpayers also may still deduct expenses for use of their vehicles for charitable purposes and medical purposes. The deduction for personal vehicle use to relocate for a job is now restricted to active military personnel.

Download Form 2106-EZ: Unreimbursed Employee Business Expenses

Form 2106 can be downloaded on the IRS website.

Form 2106-EZ is still accessible but is no longer in use.

Article Sources

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  1. Internal Revenue Service. "Tax Cuts and Jobs Act: A Comparison for Businesses." Accessed Nov. 1, 2021.

  2. Internal Revenue Service. "About Form 2106, Employee Business Expenses." Accessed Nov. 1, 2021.

  3. Internal Revenue Service. "Form 2106-EZ," Accessed Nov. 1, 2021.

  4. U.S. Department of State. "Foreign Per Diem Rates by Location–DSSR 925." Accessed Nov. 1, 2021.

  5. U.S. General Services Administration. "Per Diem Rates." Accessed Nov. 1, 2021.

  6. U.S. General Services Administration. "FY 2020 Per Diem Rates for Aspen, Colorado." Accessed Nov. 1, 2021.

  7. Internal Revenue Service. "IRS Issues Standard Mileage Rate for 2021." Accessed Nov. 1, 2021.