This chapter explains where and how to report the expenses discussed in this publication. It discusses reimbursements and how to treat them under accountable and nonaccountable plans. It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. taxmap/pubs/p463-013.htm#en_us_publink100034097
This section provides general information on where to report the expenses discussed in this publication.taxmap/pubs/p463-013.htm#en_us_publink100034098
You must report your income and expenses on Schedule C or C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. You do not use Form 2106 or 2106-EZ.
If you claim car or truck expenses, you must provide certain information on the use of your vehicle. You provide this information on Schedule C, Schedule C-EZ, or Form 4562.
If you file Schedule C:
- Report your travel expenses, except meals, on line 24a,
- Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b,
- Report your gift expenses and transportation expenses, other than car expenses, on line 27, and
- Report your car expenses on line 9. Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization.
If you file Schedule C-EZ, report the total of all business expenses on line 2. You can only include 50% of your meals and entertainment in that total. If you include car expenses, you must also complete Part III of the form.
If you file Schedule F:
- Report your car expenses on line 12. Attach Form 4562 and provide information on the use of your car in Part V of Form 4562.
- Report all other business expenses discussed in this publication on line 34. You can only include 50% of your meals and entertainment on that line.
See your forms instructions for more information on how to complete your tax return.
If you are both self-employed and an employee, you must keep separate records for each business activity. Report your business expenses for self-employment on Schedule C, C-EZ, or F (Form 1040), as discussed earlier. Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next.taxmap/pubs/p463-013.htm#en_us_publink100034100
If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions.
- You are an employee deducting expenses attributable to your job.
- You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements).
- If you claim car expenses, you use the standard mileage rate.
If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules
discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040).
If 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 or C-EZ (Form 1040). Do not complete Form 2106 or 2106-EZ.
Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers.
If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies.
If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. You cannot deduct personal expenses. taxmap/pubs/p463-013.htm#en_us_publink100034105
If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity.
For example, if you have rental real estate income and expenses, report your expenses on Schedule E, Supplemental Income and Loss. See Publication 527, Residential Rental Property, for more information on the rental of real estate. If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. taxmap/pubs/p463-013.htm#en_us_publink100034106
If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. You cannot use the standard mileage rate. taxmap/pubs/p463-013.htm#en_us_publink100034107
Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Your employer must separately state the amount if 100% of the annual lease value was included in your income. If you are unsure of the amount included in your Form W-2, ask your employer. taxmap/pubs/p463-013.htm#en_us_publink100034108
You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. On your 2009 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 12.
To claim your expenses, complete Part II, Sections A and C, of Form 2106. Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Complete the rest of the form.taxmap/pubs/p463-013.htm#en_us_publink100034109
If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Do not enter this value on your Form 2106; it is not deductible.
If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Examples of costs that you may have are gas, oil, and repairs. Complete Part II, Sections A and C, of Form 2106. Enter your actual costs on line 23 of Section C and leave line 25 blank. Complete the rest of the form.