Travel Expenses: Can Employees Deduct Work-Related Costs?

Employees can deduct certain work-related travel expenses from their taxable income. However, the criteria for doing so depend on the employee's country of residence and their employment status. In the United States, for example, the Tax Cuts and Jobs Act of 2017 eliminated almost all tax deductions for unreimbursed employee expenses. However, specific groups, such as reservists in the armed forces, qualified performing artists, and employees with impairment-related work expenses, can still claim certain deductions. On the other hand, self-employed individuals and small business owners generally have more flexibility in deducting work-related travel expenses, even if they take the standard deduction. It is important to review the specific regulations and criteria that apply to your situation when determining if you can deduct travel expenses for work.

Reservists in the armed forces can deduct travel expenses

Reservists can deduct additional employee business expenses if they itemize deductions on Schedule A. Itemizing is generally a better option if they have enough deductions to exceed the standard deduction for their filing status.

To claim this tax break, reservists should complete Form 2106EZ and include the expenses on line 21 of Form 1040 Schedule A. The expenses are not an itemized deduction and are limited to the regular federal per diem rate for lodging, meals, and incidental expenses, as well as the standard mileage rate for car expenses, plus any parking fees, ferry fees, and tolls.

Reservists should note that this tax break is only available for the current tax year and the previous three years. They can amend their tax returns for those years if they did not initially claim this deduction.

Qualified performing artists can deduct travel expenses

Since the passage of the Tax Cuts and Jobs Act in 2017, all miscellaneous itemized deductions, including unreimbursed employee expenses, have been eliminated. However, qualified performing artists can still deduct certain job-related expenses that aren't reimbursed.

To be considered a qualified performing artist, a taxpayer must meet the following criteria:

• The taxpayer must have worked as a performing artist for at least two employers in the capacity of an employee (not an independent contractor).
• The taxpayer must have received wages of $200 or more from at least two of those employers.
• Allowable work-related expenses connected to the performing arts must be more than 10% of the taxpayer's gross income from the performing arts.
• The taxpayer's adjusted gross income (AGI) must be $16,000 or less before deducting work-related expenses.
• If the taxpayer is married, they must file a joint return to deduct job-related expenses, unless they didn't live with their spouse at any point during the tax year.

Qualified performing artists can deduct "ordinary and necessary expenses" from their AGI. "Ordinary and necessary expenses" refer to expenses that are common and accepted in the performing arts industry and are helpful and appropriate for the artist's work. These expenses may include:

• Travel costs
• Supplies
• Insurance (other than health)
• Depreciation
• Car expenses
• Equipment rentals

It is important to note that these expenses are only deductible if they are directly attributable to the artist's work as an employee in the performing arts. If the expenses are also used for personal purposes or as an independent contractor, they must be prorated accordingly.

Incorrectly attributing expenses can result in penalties and interest being levied by the IRS and/or state tax agencies. Therefore, it is recommended to consult with a tax professional to ensure accurate reporting of deductions.

Fee-basis state or local government officials can deduct travel expenses

The Tax Cuts and Jobs Act of 2017 eliminated almost all tax deductions for unreimbursed employee expenses. However, a few specific types of W-2 employees can still claim work expenses, including fee-basis state or local government officials. These employees can deduct eligible employee expenses if they are employed by a state or local government and are compensated, either wholly or in part, on a fee basis.

Eligible employees can report and claim their unreimbursed work expenses using Form 2106, "Employee Business Expenses". Deductible travel expenses include vehicle costs, travel costs, meals, and lodging, but the IRS has stringent rules for documentation. Taxpayers must "prove the time, place, business purpose, business relationship (for gifts), and amounts of these expenses", and receipts must be provided for all lodging expenses or for any work expense of $75 or greater.

It is important to note that the deduction for unreimbursed employee expenses is currently set to be reinstated for all W-2 employees in 2026, but this could change with future congressional action.

Employees with impairment-related work expenses can deduct travel expenses

Employees with impairment-related work expenses can deduct travel costs. This includes the cost of travel by plane, train, bus, or car between an employee's home and their business destination. It also includes fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location.

Impairment-related work expenses include the cost of attendant care at an employee's place of employment, as well as other workplace-related expenses that are necessary for them to be able to work.

To deduct travel expenses, employees must prove the time, place, business purpose, business relationship, and amount of these expenses. Receipts must be provided for all lodging expenses or for any work expense of $75 or more.

Educators can deduct travel expenses

The Tax Cuts and Jobs Act of 2017 suspended unreimbursed employee expense deductions for most workers from 2018 to 2025. However, educators are among a handful of workers who can still deduct certain unreimbursed expenses.

Educators can deduct certain job-related expenses that aren't reimbursed, including professional development courses related to the curriculum or students they teach, and books, supplies, equipment, and other materials used in the classroom.

Eligible educators working in kindergarten through 12th grade can deduct up to $300 of unreimbursed expenses on line 11 of Form 1040 Schedule 1. Teachers and other educators don't need to fill out Form 2106 and can report their deduction directly on Schedule 1 (Form 1040) as an above-the-line deduction. This means the educator expense deduction can be claimed along with the Standard Deduction.

Educators should keep tax records, such as receipts, pay stubs, canceled checks, and bank statements, to verify deductions for job-related expenses. If the IRS questions the deduction, these records will be necessary to prove the expenses weren't reimbursed.

Educators can deduct unreimbursed travel expenses for business-related, short-term education. Travel expenses must be ordinary and necessary, and they can't be lavish, extravagant, or for personal purposes.

Deductible travel expenses include:

• Travel by airplane, train, bus, or car between home and business destination.
• Fares for taxis or other transportation between an airport or train station and a hotel, or from a hotel to a work location.
• Shipping baggage and sample or display materials between regular and temporary work locations.
• Using a personally owned car for business.
• Dry cleaning and laundry.
• Business calls and communication.
• Tips paid for services related to any of these expenses.
• Other similar, ordinary, and necessary expenses related to business travel.

Frequently asked questions