Generally, you must use Form 2106 or Form 2106-EZ to figure your deduction for employee business expenses and attach it to your Form 1040. Your deductible expense is then taken on Schedule A of Form 1040, as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limit.
If you are an employee, you may be able to deduct your work-related expenses as an itemized deduction (subject to limitations). These employee business expenses include the cost of business travel away from home, local transportation, entertainment, gifts, and other ordinary and necessary expenses related to your job.
Deductible travel expenses are the ordinary and necessary expenses of temporarily traveling away from your tax home on business. They include the cost of transportation, meals (subject to certain limits), lodging and other expenses related to your business travel. For travel expense purposes, generally, your tax home is the entire city or general area where your main place of business is located, regardless of where you maintain your family residence.
Although commuting costs are not deductible, some local transportation expenses are. Deductible local transportation expenses include the ordinary and necessary expenses of going from one work place to another when you are in the area of your tax home. (For more details see Form 2106 instructions).
Standard mileage rate. The 2014 rate for business use of your vehicle is 56 cents a mile.
Business entertainment expenses and business gift expenses may be deductible but subject to certain limits. You must keep records to prove the expenses you deduct.
If your employer reimbursed you or gave you an advance or allowance for your employee business expenses that is treated as paid under an accountable plan, the payment is not shown on your Form W-2 as pay. You do not include the payment in your income.
To be an accountable plan, your employer's reimbursement or allowance arrangement must include all three of the following rules:
You must have paid or incurred expenses that are deductible while performing services as an employee of your employer.
You must adequately account for these expenses within a reasonable time frame.
You must return any excess reimbursement or allowance within a reasonable time frame.
If your employer's reimbursement arrangement does not meet all three requirements, the payments you receive should be included in the wages shown on your Form W-2. You must report the payments as income and you must itemize your deductions to deduct your expenses.
If you were reimbursed for travel or transportation under an accountable plan, but at a per diem or mileage rate that exceeds the IRS approved rate, the excess should be included in the wages on your Form W-2. If your actual expenses exceed the approved rate, you must itemize your deductions to deduct the excess.