As I understand your situation, your employer is reimbursing your job expenses, but including the reimbursement as income on your W-2.
Q. Is there any way to indicate this to avoid paying additional personal taxes?
A. No.
Q. Is there a better way for my employer to do this?
A. Yes. They should reimburse you under an "accountable plan".
No tax reporting is required for benefits that meet the accountable plan rules. IRC Section
451(a); Announcement (Ann.) 85-113, 1985-31 I.R.B. 31Under an accountable plan, allowances or reimbursements paid to employees for job-related
expenses are excluded from wages and are not subject to withholding. An allowance or
reimbursement policy (not necessarily a written plan) is considered an accountable plan if:
-There is a business connection to the expenditure.
-There is adequate accounting by the recipient within a reasonable period of time.
-Excess reimbursements or advances are returned within a reasonable period of time. IRC
Section 62(c); Treas. Reg. Section 1.62-2(c)(2)
The employer still gets a business deduction for what he reimburses you, but you don't get taxed.
