To figure your taxable income, you must subtract either your
standard deduction or your itemized deductions from adjusted gross
income. For information on the standard deduction, get Publication 501.
Itemized deductions are figured on Schedule A (Form 1040).
This chapter discusses itemized
deductions of particular interest to members of the Armed Forces. For
information on other itemized deductions, get the publications listed
below.
Miscellaneous Itemized Deductions
You must reduce the total of most miscellaneous itemized deductions
by 2% of your adjusted gross income. For information on deductions
that are not subject to the 2% limit, get Publication 529.
Employee Business Expenses
Deductible employee business expenses are miscellaneous itemized
deductions subject to the 2% limit.For information on employee
business expenses, get Publication 463.
Generally, you must file Form 2106, Employee Business
Expenses, or Form 2106-EZ, Unreimbursed Employee
Business Expenses, to claim these expenses. You do not have to
file Form 2106 or Form 2106-EZ if you are claiming only
unreimbursed expenses for uniforms, professional society dues, and
work-related educational expenses (all discussed later). You can
deduct these expenses directly on Schedule A (Form 1040).
Reimbursement.
Generally, to receive advances, reimbursements, or other allowances
from the government, you must adequately account for your expenses and
return any excess reimbursement. Amounts that are not excess
reimbursements that you receive under an accountable plan are not
included on your Form W-2. Your reimbursed expenses are not
deductible.
If your expenses are more than your reimbursement, the excess
expenses are deductible (subject to the 2% limit) if you can prove
them. You must file Form 2106 to report these expenses.
You can use the shorter Form 2106-EZ if you meet both of the
following conditions.
- You were not reimbursed for your expenses, or, if you were
reimbursed, the amount you received was included in your income in box
1 of your Form W-2.
- If you claim car expenses, you use the standard mileage
rate.
For 2000, the standard mileage rate is 32.5 cents a mile for all
business miles driven. This rate is adjusted periodically for
inflation.
Travel expenses.
You can deduct unreimbursed travel expenses only if they are
incurred while you are traveling away from home. To be deductible,
your travel expenses must be work related. You cannot deduct any
expenses for personal travel, such as visits to family while on
furlough, leave, or liberty.
Away from home.
Home is your permanent duty station (which can be a ship or base),
regardless of where you or your family live. You are away from home if
you are away from your permanent duty station substantially longer
than an ordinary day's work and you need to get sleep or rest to meet
the demands of your work while away from home.
Examples of deductible travel expenses include:
- Expenses for business-related meals (generally limited to
50% of your unreimbursed cost), lodging, taxicabs, business telephone
calls, tips, laundry, and dry cleaning while you are away from home on
temporary duty or temporary additional duty, and
- Expenses of carrying out official business while on "No
Cost" orders.
You cannot deduct any expenses for travel away from your tax home
if the period of temporary employment is for more than one year. This
rule may not apply if you are participating in a federal crime
investigation or prosecution. For more information, see Publication 463
and the Form 2106 instructions.
Reservists.
You can deduct travel expenses if you are under competent orders,
with or without pay, and away from your main place of business
overnight to perform drills and training duty.
If you are called to active duty, you can deduct travel expenses if
you keep your regular job while on active duty, return to your job
after release, and are stationed away from the general area of your
regular job or business. However, you can deduct these expenses only
if you pay for them at your official military post and only to the
extent the expenses exceed BAH and BAS.
Local transportation expenses.
Local transportation expenses are the ordinary and necessary costs
you have to get from one workplace to another while not traveling away
from home and for certain other business-related local transportation.
For example, these expenses include the costs of transportation by
air, bus, rail, taxi, and driving and maintaining your car, but do not
include meals and lodging. If you must go from one workplace to
another while on duty (for example, as a courier or to attend
meetings) without being away from home, your unreimbursed
transportation expenses are deductible. However, the expenses of
getting to and from your regular place of work (commuting) are not
deductible.
Temporary work location.
If you have a regular place of business and commute to a temporary
work location, you can deduct daily transportation expenses for travel
between:
- Your home and any temporary work location within the city or
general area where you normally work (your tax home) or outside that
area,
- Your home office and any other work location (regular or
temporary) in the same trade or business if your home office qualifies
as your principal place of business (tax home).
Generally, if your employment at a work location is realistically
expected to last (and does in fact last) for 1 year or less, the
employment is temporary. If your employment at a work location is
realistically expected to last for more than 1 year or if there is no
realistic expectation that the employment will last for 1 year or
less, the employment is not temporary, regardless of whether it
actually lasts for more than 1 year. If employment at a work location
initially is realistically expected to last for 1 year or less, but at
some later date the employment is realistically expected to last more
than 1 year, that employment will be treated as temporary (unless
there are facts and circumstances that would indicate otherwise) until
your expectation changes.
If you do not have a regular place of business, but you
ordinarily work in the metropolitan area where you live, you can
deduct daily transportation expenses between your home and a temporary
work site outside your metropolitan area. However, you cannot deduct
daily transportation costs between your home and temporary work sites
within your metropolitan area.
Uniforms.
You usually cannot deduct the expenses for uniform cost and upkeep.
Generally, you must wear uniforms when on duty and you are allowed to
wear them when off duty.
If military regulations prohibit you from wearing certain uniforms
off duty, you can deduct the cost and upkeep of the uniforms, but you
must reduce your expenses by any allowance or reimbursement you
receive.
Expenses for the cost and upkeep of
the following articles are deductible.
- Military battle dress uniforms and utility uniforms if you
cannot wear them off duty.
- Articles not replacing regular clothing, including insignia
of rank, corps devices, epaulets, aiguillettes, and swords.
- Reservists' uniforms
if you can wear the uniform only
while performing duties as a reservist.
Professional dues.
You can deduct dues paid to professional societies directly related
to your military position. However, you cannot deduct amounts paid to
an officers' club or a noncommissioned officers' club.
Example.
Lieutenant Margaret Allen, an electrical engineer at Maxwell Air
Force Base, can deduct professional dues paid to the American Society
of Electrical Engineers.
Educational expenses.
You can deduct work-related educational expenses if they meet
certain rules.
Qualifications.
You can deduct the costs of qualifying education. This is education
that meets at least one of the following two tests.
- The education is required by your employer or the law to
keep your present salary, status, or job. The required education must
serve a bona fide business purpose of your employer.
- The education maintains or improves skills required in your
present work.
Even if the above requirements are met, you cannot deduct expenses
for education necessary to meet the minimum educational requirements
of your present trade or business. Also, you cannot deduct expenses
for a program of study that can qualify you for a new trade or
business.
Example 1.
Lieutenant Colonel Mason has a degree in financial management and
is in charge of base finances at her post of duty. She took an
advanced finance course. She already meets the minimum qualifications
for her job. By taking the course, she is improving skills in her
current position. The course does not qualify her for a new trade or
business. She can deduct educational expenses that are more than the
educational allowance she received.
Example 2.
Major Williams worked in the military base legal office as a legal
intern. He was placed in "excess leave status" by his employer to
attend law school. He paid all his educational expenses and was not
reimbursed. After obtaining his law degree, he passed the state bar
exam and worked as a judge advocate. His educational expenses are not
deductible because the law degree qualified him for a new trade or
business, even though the education maintained and improved his skills
in his work.
Travel expenses.
You cannot deduct the cost of travel that is itself a form of
education, even if it is directly related to your duties in your work
or business. However, if your educational expenses qualify as a
deduction, travel for that education, including transportation, meals
(subject to the 50% limit), and lodging, can be deducted. Educational
services provided in kind, such as base-provided transportation to or
from class, are not deductible.
If you need more information on educational expenses, get
Publication 508.
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