Unreimbursed Employee Expenses

[egpowers]

I've seen a couple of questions about this going back to 2019 that it has been eliminated.

However, IRS Pub. 463 still shows this deduction as available to persons subject to USDOT rules and regulations, in fact, there is a current guide book for preparing 2022 taxes, yet TT does not include this deduction. In my case, my deduction for my meals/expenses on the road as a truck driver puts me over the standard deduction by 15%, meaning I would owe almost ZERO, instead of a large amount.

Why the discrepancy?

[PattiF]

It depends if you are an employee or self-employed, which will determine if you are eligible to take the deductions as a truck driver. 

From TurboTax Tips for Truck Drivers:  

Who can claim truck driver tax deductions?

If you're an employee of a trucking company and receive a W-2 at the end of the year, unfortunately, none of your job-related expenses are tax-deductible. If you're a self-employed driver, on the other hand, you can deduct expenses related to your work.

[egpowers]

Again, IRS Pub 463 says otherwise, and within Chp. 2 of Pub 463 it's very specific about workers who are covered under USDOT Hours Of Service Rules. Also TT refers to pub 463 for reference at least 4 different times when I click on "Learn More" tabs within TT.

IRS Pub 463: 2022 Publication 463 (irs.gov)

Individuals subject to “hours of service”
limits. You can deduct a higher percentage of
your meal expenses while traveling away from
your tax home if the meals take place during or
incident to any period subject to the Department
of Transportation's “hours of service” limits. The
percentage is 80%.
Individuals subject to the Department of
Transportation's “hours of service” limits include
the following persons.
• Certain air transportation workers (such as
pilots, crew, dispatchers, mechanics, and
control tower operators) who are under
Federal Aviation Administration regulations.
• Interstate truck operators and bus drivers
who are under Department of Transportation regulations.
• Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who
are under Federal Railroad Administration
regulations.
• Certain merchant mariners who are under
Coast Guard regulations.

[MaryK4]

The rules you are referring to are correct- but they apply to self-employed truck drivers so the deduction are taken on a Schedule C.  You cannot take the Job Related Expenses as an Itemized Deduction as a W-2 employee.  @egpowers 

[egpowers]

Ok, you are apparently are not reading the link I sent, as it specifically addresses W2 employees, and specifically states that W2 employees are still eligible to deduct meals. I will reach out to the IRS on Monday and get an answer back from them, if there is a way for me to file and claim this, I will be notifying TT that they are not doing things correctly and demanding a refund for this product.

I should point out that based on the information I posted, it is physically impossible for a railroad employee to be self employed, unless they actually own the railroad. Of all the jobs listed, only a truck driver is capable of being self employed in their respective industry.

[LLB22]

Has anyone been able to get an answer as to why Turbo Tax is not allowing deductions for unreimbursed employee travel expenses?  IRS Publication 463 for use in preparing 2022 returns (dated 2/1/2023) does not say that you have to be a reservist, performing artist, etc.  In fact, a traveling construction worker is one of the examples for determining if your assignment (away from home) is temporary or indefinite. 

Form 2106 is not carrying the information forward to Schedule A because Turbo Tax thinks there are only four scenarios where these deductions are allowed.  I suppose I could manually enter the information on Schedule A and include Form 2106 with the return, but then it will not electronically file and Turbo Tax will show errors.

Any help would be greatly appreciated.

Thank you.

[DoninGA]

@LLB22 

Employee business expenses are not deductible on a federal tax return due to the changes in the tax code for tax year 2018 thru 2025.

IRS Publication 463 page 33 - https://www.irs.gov/pub/irs-pdf/p463.pdf#page=33

Completing Form 2106
For tax years beginning after 2017, the Form 2106 will be used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section
67(a), employees who do not fit into one of the listed categories may not use Form 2106.

[egpowers]

Contrary to the turbo tax experts, it is still possible to deduct unreimbursed employee expenses, it is very specific, you must be subject to USDOT hours of service requirements, and even then, it will not get you a deduction unless it puts you over the standard deduction threshold. I have posted how to claim the deduction in here.

[egpowers]

Please read the entire pub 463, it specifically states employees subject to USDOT Hours of service regulations are still allowed to claim it, TT allows you to claim it, but it’s very confusing how to do it.

[DoninGA]

@egpowers Please provide the page number in IRS Publication 463 that specifically states that an Employee subject to USDOT hours of service requirements can deduct their employee expenses.

Also, the instructions for Form 2106, Employee Business Expenses on page 1, Purpose of Form states explicitly - https://www.irs.gov/forms-pubs/about-form-2106

 Use Form 2106 if you were an Armed Forces reservist, a qualified performing artist, a fee-basis state or local government official, or an employee with impairment-related work expenses. Employees who do not fit into one of the listed categories may not use the Form 2106 due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a). Section 67(g) suspends miscellaneous itemized deductions for tax years beginning after December 31, 2017, and before January 1, 2026

[Mike9241]

what the PUB does not make clear when it uses "employee" in many places is that only these types of employees qualify - Armed Forces reservists, qualified performing artists, fee-basis state or local government
officials, and employees with impairment-related work expenses.

statutory employees as defined also can deduct "employee" expenses. you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C. Don’t complete Form 2106. Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers.

[egpowers]

Page 2, middle of the page:

Who should use this publication. You
should read this publication if you are an em-
ployee or a sole proprietor who has busi-
ness-related travel, non-entertainment-related
meals, gift, or transportation expenses

Chapter 1, Page 3, Travel, the publication talks about "home" and traveling away from, Example 1 is a railroad conductor who must take a mandatory rest break to get necessary sleep before starting the return trip. From the publication, using EX 1"YOU ARE CONSIDERED TO BE AWAY FROM HOME"

Page 6 Chap. 1 Travel "Who can use the standard meal allowance": 

You can use the standard meal allowance
whether you are an employee or self-employed,
and whether or not you are reimbursed for your
traveling expenses.

Page 6, Chapter 1:

Special rate for transportation workers.
You can use a special standard meal allowance
if you work in the transportation industry. You
are in the transportation industry if your work:
• Directly involves moving people or goods
by airplane, barge, bus, ship, train, or
truck; and
• Regularly requires you to travel away from
home and, during any single trip, usually
involves travel to areas eligible for different
standard meal allowance rates.

If this applies, you can claim a standard meal al-
lowance of $69 a day ($74 for travel outside the
continental United States) for travel in 2022.
Using the special rate for transportation
workers eliminates the need for you to deter-
mine the standard meal allowance for every
area where you stop for sleep or rest

Page 12, Chapter 2 MEALS and ENTERTAINMENT:

Individuals subject to “hours of service”
limits. You can deduct a higher percentage of
your meal expenses while traveling away from
your tax home if the meals take place during or
incident to any period subject to the Department
of Transportation's “hours of service” limits. The
percentage is 80%.
Individuals subject to the Department of
Transportation's “hours of service” limits include
the following persons.
• Certain air transportation workers (such as
pilots, crew, dispatchers, mechanics, and
control tower operators) who are under
Federal Aviation Administration regula-
tions.
• Interstate truck operators and bus drivers
who are under Department of Transporta-
tion regulations.
• Certain railroad employees (such as engi-
neers, conductors, train crews, dispatch-
ers, and control operations personnel) who
are under Federal Railroad Administration
regulations.
• Certain merchant mariners who are under
Coast Guard regulations

When using TT, since there is no specific calculation, TT does actually give you the ability to claim the deduction, but it still applies the Standard Deduction as well.

The process for claiming the deduction in TT Home and Business:

Employment Expense > create Occupation: Truck Driver > Continue > "I wasn't in any of these professions > I'm in the transportation industry > No > No > No > No > TELL US ABOUT THESE EXPENSES FOR YOUR TRUCK DRIVER WORK ENTER THE FOLLOWING UNREIMBURSED EXPENSES YOU HAD FOR THIS WORK. WE'LL ASK YOU ABOUT ANY ADDITIONAL EXPENSES YOU HAD NEXT. FYI: ENTERTAINMENT EXPENSES USED TO APPLY HERE, BUT THEY ARE NO LONGER DEDUCTIBLE.  Third expense down MEAL EXPENSES COVERED BY DEPTARTMENT OF TRANSPORTATION RULES (ENTER YOUR TOTAL MEAL EXPENSES HERE) > WE NEED TO ASK YOU SOME MORE INFORMATION ABOUT YOUR MEAL EXPENSES > ANY OTHER EXPENSES (it then lists examples of standard expenses for many industries and gives space to enter items) > Reimbursements for your expenses: NO > 

The system states that it applies these to "State Taxes", my total deductions excluding this items was $13,700, if these extra items ($15,700 in my case) were added in, I would have been over the standard deduction. Since per publication 463 information, TT should be allowing these employee deductions to be counted. The IRS is less than helpful, they only refer you to the webpage. I talked to 4 different tax companies that specialize in the trucking industry and a Teamsters tax rep (I'm not a teamsters member) who helps teamsters members, he too stated that this deduction should be allowed per the publication, 5 different tax lawyers who all agree with me, these deductions should be allowed per the publication, but again, the forms and the programs are not setup correctly. I've even copied this information and sent it to my members of Congress and not gotten a realistic response back from them. They too are confused, and are unable to get a proper answer from the IRS. In the meantime, I will continue to attempt to claim this deduction per the publication, and per the method TT allows, if I'm audited then I'll use the language in the publication to fight it.

[Hal_Al]

@egpowers said:   " pub 463, it specifically states employees subject to USDOT Hours of service regulations are still allowed to claim it, TT allows you to claim it, but it’s very confusing how to do it."

Can you please describe how you managed to enter your expenses in TT, to get it to accept them and where on the IRS forms  the deduction showed up? 

[LLB22]

Thank you to everyone who responded.  I did see the pages in Pub. 463, more specifically relating to Form 2106, that discusses Armed Forces reservists, qualified performing artists, etc.  However, it didn't make sense to me why they would use a construction worker as an example in defining Temporary Assignment vs Indefinite Assignment (page 4) if traveling construction workers were not eligible for these deductions. 

As someone mentioned in one of the responses, the IRS does not make it clear who is not eligible to use these deductions.  See page 2 "Who should use this publication." and "Who doesn't need to use this publication." 

They make it clear who can or cannot use Form 2106 to claim these deductions, but page 2 is where they should indicate clearly who can or cannot claim these deductions.  

 I appreciate everyone's feedback.

[AmeliesUncle]

You can also look at Publication 529 which says:

This publication explains that you can no longer claim any miscellaneous itemized deductions, unless you fall into one of the qualified categories of employment claiming a deduction relating to unreimbursed employee expenses.  

• Armed Forces reservists.

• Qualified performing artists.

• Fee-basis state or local government officials.

• Employees with impairment-related work expenses.

https://www.irs.gov/publications/p529#en_US_202012_publink10003917

If you want the legal gibberish, Tax Code Section 67 is for "miscellaneous itemized deductions", which includes employee deductions (including drivers subject to the DOT rules), and subsection (g) says "no miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017, and before January 1, 2026."   The reservists, artists, etc. are allowed under a different Tax Code Section (Section 62).

https://www.law.cornell.edu/uscode/text/26/67#g