A: This certainly is an issue for you. To give you the simple answer to your question: if you have a considerable amount of unreimbursed employee business expenses you are most likely going to pay significantly more in taxes. Having said that, all situations are different so to give you an accurate answer I would have to see your numbers.
Here is the deal. If you are a “statutory employee” your business deductions are deducted in determining your Adjusted Gross Income (bottom of page one of the 1040). You have been most likely filing a Schedule C to report those deductions. As an regular employee (non statutory) your employee business expenses are considered itemized deductions reported on schedule A.
What’s the difference you might ask? Well there are two differences. First employee business expenses are considered miscellaneous itemized deductions and therefore are only the amount greater than 2% of Adjusted Gross Income is deductible for regular tax calculations. Secondly, and the big thing, is that Miscellaneous Itemized Deductions are not deducted for Alternative Minimum Tax purposes. In other words, most people in that situation get no tax advantage from their employee business expenses.
I hope that this was helpful.
With normal disclaimers because I do not know your particular situation. Contact your tax advisor in order to determine how this impacts you personally
What’s the difference you might ask? Well there are two differences. First employee business expenses are considered miscellaneous itemized deductions and therefore are only the amount greater than 2% of Adjusted Gross Income is deductible for regular tax calculations. Secondly, and the big thing, is that Miscellaneous Itemized Deductions are not deducted for Alternative Minimum Tax purposes. In other words, most people in that situation get no tax advantage from their employee business expenses.
I hope that this was helpful.
