Q. Should the income on the w2 be reduced by expenses i'm being reimbursed for ?
A. No. Since 2018, W-2 employees are not allowed to deduct employee expenses. If your employer included expense reimbursement, on your W-2, then it is taxable income to you.
But, the bigger question is: should your employer include expenses reimbursement on your W-2. The answer is it depends on the employer's reimbursement policy. The simplest explanation goes like this: if your employer give you a fixed "allowance" for expenses, then that allowance is taxable income to you and should be included on your W-2.
If you account to your employer, in the form of an expense report for your exact expenses, and that's what they reimburses you for (an "Accountable plan"), then the amount is not taxable or reported on your W-2.
If it's included on your W-2, it's taxable and you can not take a deduction, on your federal return (some states allow a deduction, on the state return). Your only remedy is a corrected W-2 from your employer.
You may want to talk to your employer about switching you to an "accountable plan" for expense reimbursement (it does not get added to your W-2 as taxable income), instead of a fixed allowance. On the other hand, if the allowance is generous, you may be better off paying taxes on it.
