What Was Form 2106: Employee Business Expenses?
Form 2106: Employee Business Expenses was a tax form distributed by the Internal Revenue Service (IRS) used by employees to deduct ordinary and necessary expenses related to their jobs. Ordinary expenses were generally considered common and accepted in a particular line of business, while necessary expenses are those that are helpful in conducting business.
- Form 2106 was used by employees to deduct ordinary and necessary expenses related to their jobs.
- This form was used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses.
There was another version of the form. Form 2106-EZ: Unreimbursed Employee Business Expenses was a simplified version and was used by employees claiming a tax deduction because of unreimbursed expenses related to their jobs.
Which form you used depended upon how you wanted to treat your expenses and whether you received partial reimbursements from your employer for expenses claimed.
The Tax Cuts and Jobs Act repealed all unreimbursed employee expenses.
As of tax year 2018, unreimbursed employee business expenses can no longer be claimed for a tax deduction. The only people who can use Form 2106-EZ are Armed Forces reservists, qualified performing artists, fee-based state and local government officials, and employees with impairment-related work expenses.
Who Could File Form 2106: Employee Business Expenses?
According to the IRS, only the following taxpayers could use Form 2106:
- Armed Forces reservists
- Qualified performing artists
- Fee-basis state or local government officials
- Employees with impairment-related work expenses
- Prior to 2018, any employee with unreimbursed work expenses could use Form 2106 to claim those expenses as a miscellaneous itemized deduction
Self-employed individuals were not permitted to file Form 2106. Instead, they filed a Schedule C itemization form with their tax return.
How to File Form 2106: Employee Business Expenses
There were two parts to Form 2106. Part I tabulated all employee business expenses and reimbursements. This part then calculated whether, and which, expenses were eligible for a tax deduction. These included vehicle expenses, parking, toll, and transportation charges and other business expenses. The filer would also include any reimbursements made by the employer.
Part II dealt more specifically with vehicle expenses. Filers had two choices. They could use the standard mileage rate, which meant multiplying the IRS mileage for the tax year by the number of business-qualifying miles driven. The mileage rate factored in gasoline and repair expenses, plus wear-and-tear on the average car. In 2018, it was set at 54.5 cents per mile.
The second method was to calculate actual expenses. These included gasoline, oil, repairs, insurance, registration, and depreciation which was factored with the use of a table in the instructions. You were not able to deduct interest on car loans. There were also limits on car valuations. Whether you used standard mileage or actual expenses, expenses incurred commuting to and from work were not considered eligible business expenses.
Download a copy of Form 2106: Employee Business Expenses.