What Is Form 2106: Employee Business Expenses?

What Is Form 2106: Employee Business Expenses?

I'm here to explain Form 2106, which is an IRS tax form that lets employees deduct ordinary and necessary expenses tied to their jobs. You know, ordinary expenses are the ones common in your field, and necessary ones are those that actually help you do your work.

But listen, since 2018, most taxpayers can't claim unreimbursed employee business expenses as deductions anymore. The only ones who can use Form 2106 are Armed Forces reservists, qualified performing artists, fee-based state or local government officials, and employees with impairment-related work expenses. Before the Tax Cuts and Jobs Act of 2018, any employee could deduct these unreimbursed job expenses.

Also, the simplified Form 2106-EZ for unreimbursed business expenses got discontinued after 2018 due to that same tax act.

Key Takeaways

Form 2106 exists for employees to deduct expenses related to their jobs. Remember, it's only for those specific groups: Armed Forces reservists, qualified performing artists, fee-based government officials, and employees with impairment-related expenses. The form breaks into two parts—Part I handles all expenses and reimbursements, while Part II focuses on vehicle expenses.

Who Can File Form 2106?

According to the IRS, you can only use Form 2106 if you're an Armed Forces reservist, a qualified performing artist, a fee-based state or local government official, or an employee with impairment-related work expenses.

Before 2018, any employee with unreimbursed work expenses could file it to claim them as a miscellaneous itemized deduction.

Important Note on Tax Changes

You used to have options for claiming job-related expenses: an above-the-line deduction or an itemized one for unreimbursed W-2 income expenses. But tax reform via the Tax Cuts and Jobs Act eliminated the itemized deduction starting in 2018.

How to File Form 2106

Form 2106 has two parts. In Part I, you tabulate all your employee business expenses and reimbursements, then figure out which ones qualify for a deduction. This covers vehicle expenses, parking, tolls, transportation, and other business costs, plus any employer reimbursements.

Part II zeros in on vehicle expenses. You have two methods: the standard mileage rate, where you multiply the IRS rate for the year by your business miles. For 2025, that's 70 cents per mile, up from 67 cents in 2024. This rate accounts for gas, repairs, and wear and tear.

Or you can use actual expenses like gas, oil, repairs, insurance, registration, and depreciation from the instructions table. You can't deduct car loan interest, and there are limits on car values. No matter the method, commuting to and from work doesn't count as a business expense.

What Is IRS Form 2106 Used For?

You use Form 2106 to deduct unreimbursed job expenses if you're eligible. These can include tools, education, clothing, home office costs, insurance, and dues or fees to professional organizations.

What Counts As Unreimbursed Job Expenses?

Unreimbursed job expenses include items like tools, education, clothing, insurance, home office costs, and any dues or fees paid.

What Are the IRS Deductions for 2024?

For 2025, the standard deduction is $15,000 for single taxpayers, up from $14,600 in 2024. For married couples filing jointly, it's $30,000, increased from $29,200 in 2024.

The Bottom Line

If you're an Armed Forces reservist, qualified performing artist, fee-based government official, or have impairment-related work expenses, you can use Form 2106 to deduct your ordinary and necessary job expenses. But since 2018, most taxpayers can't claim unreimbursed business expenses unless they fit these categories.