I work out of town alot, and I need to prepare for next years taxes?

Question

I have a relatively new job that sends me out on the road alot. I am a construction truck driver and I spend weeks at a time in motels. I have kept alot of my receipts and I use a debit card for alot of my transactions. I would like to know what I can do to prepare for the next tax season. i have a pro do my taxes, but I have never itemized before. help please

Answer 1

What is your company reimbursing you for?

What are they not reimbursing you for?

You may find that as a w-2 employee, that you may not be able to itemize.

Additional info.

Okay, you are not on an accountable plan, so any money they give you for expenses is ADDED to your W-2.

So let's say you make $40,000, get $6000 in expenses money, but had $10,000 in expenses ($2000 for food).  To you, you think you really made $36000 in income.  To the IRS, you will appear to make $43000.  That's right, even though you paid $4000 out of your own pocket, the IRS is going to tax you even more.

Here's why:

Your W-2 will show $46000 in income.  (When they don't make you turn in the receipts, it's ALL income.)

Your 2106 will show $9000 in expenses.  (You lose 50% of the food.)

You move the $9000 in expenses to the schedule A, lose $920 due to a 2% rule.  (A tax rule that burns people like you.)  That leaves $8080 for schedule A.  If you are single and didn't have anything else to itemize, you would have gotten a $5450 standard deduction anyway, so the $8080 only reduces your taxable income by $2630.

And if your income is higher and you normally itemize, you run the risk of hitting AMT as unreimbursed business expenses are not deductible on the AMT form.

Answer 2

You should ask the professional that does your taxes. You should get things together in such a way that they are most helpful to the person that does your taxes.

Answer 3

First off you need to find out if your employer operates an accountable reimbursement plan.  If he does then you only need to file your expense reports with your employer.  Any reimbursements will be based upon what the law allows and you won't have any tax issues to worry about.  The reimbursements will not show up on your W-2 and you need make no further reports to the IRS on your tax return.

If your employer does NOT operate an accountable plan, the first thing is to implore him to do so.  Failing that, you'll have to keep detailed records of all of your costs.  You'll need receipts for all lodging expenses and for any other single expense item of $25 or more.  A diary will suffice for expense items (other than lodging) of less than $25.  The expense reimbursements will be included on your W-2 and you'll need to file Form 2106 with your tax return.  The total there will flow to Schedule A as a miscellaneous itemized deduction.  Sadly if your total expenses and other itemized deductions are less than the Standard Deduction for your filing status, you'll lose out on the deductibility of any of your expenses.

If you have to go the Form 2106 route, keep in mind that you can only deduct 1/2 the cost of your meals.  On an accountable plan that becomes your employer's problem.  He can reimburse you 100% and you will not have any taxable income from that "excess" reimbursement.  Most employers require you to turn in receipts anyway so there's rarely a good reason for them to not operate an accountable plan unless they routinely reimburse items that are not normally deductible.  (I knew of one who covered the cost of prostitutes in Nevada and Europe where it was legal, however that's a no-no with the IRS.)

Edit:  OK, since your employer gives you a flat reimbursement you must go the Form 2106 route.

Answer 4

Generally you should keep all receipts for any business related expenses- hotels, meals, gas, etc, as well as a daily log. If you are an employee and you are reimbursed by your employer for these expenses, you will not be claiming them on your taxes.

If you are a contractor, again save all business related receipts. You will be able to deduct most of these unreimbursed expenses.

For a complete listing of employee business expenses, see the irs tax topic 514-