This chapter discusses rules for deducting the ordinary and necessary business-related expenses connected with:
- Travel away from home,
- Gifts, and
- Local transportation.
An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary.
This chapter also discusses:
- What records you need to prove your expenses,
- How to handle reimbursements of your employee business expenses, and
- How to report your expenses on Forms 2106 and 2106-EZ.
Who does not need to use this publication.
You will not need to read this chapter if all of the following are true.
- You fully accounted to your employer for your work-related expenses.
- You received full reimbursement for your expenses.
- Your employer required you to return any excess reimbursement and you did so.
- Box 13 of your Form W-2, Wage and Tax Statement,
shows no amount with a code L.
If you meet these four conditions, there is no need to show the expenses or the reimbursements on your return. See Reimbursements, later, if you would like more information on reimbursements and accounting to your employer.
If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2.
If you do not meet all of these conditions, you generally must complete Form 2106 or 2106-EZ and itemize your deductions to claim your expenses. See Completing Forms 2106 and 2106-EZ, later.
- 463 - Travel, Entertainment, Gift, and Car Expenses
- 535 - Business Expenses
- 1542 - Per Diem Rates
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