WHAT IS Form 2106-EZ: Unreimbursed Employee Business Expenses
Form 2106-EZ: Unreimbursed Employee Business Expenses is a tax form distributed by the Internal Revenue Service (IRS) and used by employees deducting ordinary and necessary expenses related to their jobs. Ordinary expenses are those generally considered as common and accepted in a particular line of business; necessary expenses are those that are helpful to conducting business.
BREAKING DOWN Form 2106-EZ: Unreimbursed Employee Business Expenses
Form 2106-EZ is a simplified version of Form 2106. In order to qualify for a deduction from Form 2106-EZ, the employee cannot have been reimbursed by the employer for the expenses. In addition, unlike on Form 2106 there is no option to calculate vehicle expenses using actual costs; filers are limited to the standard mileage rate. The form is divided into two parts. Part I tabulates all employee business expenses, then calculates whether and which expenses are eligible for a tax deduction. Part II more specifically addresses vehicle expenses.
Only Half of Meal Costs Is Deductible
In Part I, employees must list all business expenses, such as airfare, lodging, parking, tolls and car rental as well as personal vehicle expenses from Part II. So-called incidental expenses describe valet tips and other small cash transactions that don’t typically generate a receipt. Meals and entertainment are tabulated separately because most taxpayers are only allowed to claim 50 percent of those expenses, on the theory that you would need to eat and relax at some point even if you weren’t on a business trip.
An alternate method of calculating overnight expenses is to use the General Services Administration (GSA) per diem rates for cities around the United States or, in the case of foreign travel, the State Department rates for every country. Note that lodging rates vary considerably by month, based on supply and demand in any given locality. For example, the GSA allows a per diem lodging rate of $424 in Aspen, Colo. during January 2018, but only $164 in September. The per diem meal rate does not change monthly and, as of 2018, was listed as $74 for Aspen.
Form 2106-EZ Filers Must Use the Standard Mileage Rate
Part II addresses personal vehicle expenses, which must be claimed using the standard mileage rate. This entails 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; in 2018 it was set at 54.5 cents per mile. Expenses incurred commuting to and from work are not an eligible business expense.