If you’re an employee, you can deduct unreimbursed employee business expenses if you itemize your deductions on Schedule A. The total of your employee business expenses must exceed 2% of your adjusted gross income to be deductible. However, if you’re self-employed, your business expenses are fully deductible on Schedule C.
Some common business expenses that you can deduct are:
Business liability or malpractice insurance premiums. You can deduct insurance premiums that you pay for protection against personal liability for wrongful acts on the job, or for professional negligence resulting in injury or damage to patients or clients.
Business use of home expenses. If you use a part of your home regularly and exclusively for business purposes, and you are required to work at home for the convenience of your employer, you can deduct part of the operating expenses and depreciation of your home. To learn more, see Home Office Deduction.
Rent paid for business space or equipment. You can deduct rent paid for business space or business equipment that you use in your job.
Dues to professional societies or a chamber of commerce. If membership in an organization benefits your job, you can deduct the dues you pay. This includes organizations such as bar or medical associations, boards of trade, business leagues, civic or public service organizations such as Kiwanis, Lions, or Rotary clubs, or real estate boards and trade associations. You can also deduct subscriptions to professional journals and trade magazines related to work.
Work-related education. You can deduct the cost of education that maintains or improves the skills required by your present job, or is required by your employer. Deductible expenses include amounts paid for tuition, books, fees, and equipment. You can’t deduct expenses if the course isn’t related to your job or qualifies you for a new trade or profession. You also can’t deduct expenses if you’re required to take classes to meet the minimum educational requirements in effect when you first obtained the job. To learn more, see Education Expenses and Work.
Job-search expenses. You can deduct expenses that you incur while searching for a new job in your present occupation, even if you don’t find one. Expenses that you can deduct include employment agency fees, costs of preparing or having a resume prepared, postage for mailing resumes or other job-search correspondence, mileage and parking fees, and travel expenses, if the primary purpose of the trip is to look for a new job.
Licenses, regulatory fees, and occupational taxes. You can deduct the amount you pay each year to your state or local government for licenses and regulatory fees for your trade, business, or profession. You can also deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality.
Medical exams required by your employer. You can deduct the cost of medical and eye exams that your employer requires you to have.
Supplies and general office or operating expenses. You can deduct the cost of tools that wear out and are thrown away within 1 year from the date of purchase. However, you must depreciate the cost of tools that have a useful life beyond a year and cost $100 or more.
Telephone expenses. You can deduct the cost of long-distance calls that you make for business, as well as the cost of any telephone features that you use strictly for business. You can’t deduct the base rate of the first telephone line into your home, but you can deduct the cost of a second business line.
Travel expenses. Travel expenses are those incurred while traveling away from tax home overnight for your employer. Travel expenses include the cost of getting to and from your business destination, meals and lodging while away from home, baggage charges, and cleaning and laundry expenses while away from home. To learn more, see Business Travel Expenses.
Transportation expenses. You can deduct the cost of getting from one workplace to another when you’re not traveling away from home. You can deduct actual expenses or use the standard mileage rate to figure your car expenses. To learn more, see Car and Truck Expenses.
Entertainment and meals. You can deduct 50% of the cost of entertainment expenses, including entertainment-related meals, if it directly precedes or follows a substantial and bona fide business-related discussion. To learn more, see Meals and Entertainment.
Gifts. You can deduct the cost of gifts up to a maximum of $25 per year per current or prospective customer. However, items that cost $4 or less and have your name permanently imprinted on them, such as pens, desk sets, and plastic bags, don’t count towards the $25 gift limit.
Union dues and expenses. You can deduct dues and initiation fees you pay for union membership.
Work clothes, uniforms, and protective clothing. You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. If you’re required to wear a uniform for your job, the cost of the uniform and the cost of caring for it -- such as cleaning, repairs, and alterations -- are deductible. In addition, the uniform must not be suitable for everyday wear. For example, if you’re a postal carrier or police officer, you can deduct the cost of your uniform. However, you can’t deduct the cost of business suits or dresses that a professional organization requires you to wear because those are suitable for everyday wear not associated with work.
For more information, see Publication 529: Miscellaneous Deductions.