Instructions For Form 2106 - Employee Business Expenses

deduction to enter on Form 2106, line

2006. However, you can apply the

verified the time, place, and business

rates in effect before October 1,

purpose of the travel for that day.

•

2006, for expenses of all travel within

Your employer reimbursed you for

You may be able to take a

the United States for 2006 instead of

vehicle expenses at the standard

TIP

credit for your educational

the updated rates. For the period

mileage rate or according to a flat

expenses instead of a

October 1, 2006 – December 31,

rate or stated schedule, and you

deduction. See Form 8863, Education

2006, you must consistently use

verified the date of each trip, mileage,

Credits, for details.

either the rates for the first 9 months

and business purpose of the vehicle

Do not include expenses for meals

of 2006 or the updated rates.

use.

and entertainment, taxes, or interest

See Pub. 463 for more details.

For locations outside the

on line 4. Deductible taxes are

continental United States, the

entered on Schedule A (Form 1040),

Allocating your reimbursement.

applicable rates are published each

lines 5 through 9 (or Schedule A

If your employer paid you a single

month. You can find these rates on

(Form 1040NR), lines 1 through 3).

amount that covers meals and

the Internet at

Employees cannot deduct car loan

entertainment as well as other

interest.

business expenses, you must

See Pub. 463 for details on how to

allocate the reimbursement so that

Note. If line 4 is your only entry, do

figure your deduction using the

you know how much to enter in

not complete Form 2106 unless you

standard meal allowance, including

Column A and Column B of line 7.

are claiming:

special rules for partial days of travel

•

Use the following worksheet to figure

Performing-arts-related business

and transportation workers.

this allocation.

expenses as a qualified performing

artist,

Step 2—Enter

•

Reimbursement Allocation

Expenses for performing your job

Reimbursements Received

Worksheet

as a fee-basis state or local

From Your Employer for

government official, or

(keep for your records)

•

Expenses Listed in Step 1

Impairment-related work expenses

as an individual with a disability.

Line 7. Enter reimbursements

1. Enter the total amount of

See the line 10 instructions for

received from your employer (or third

reimbursements your

definitions. If you are not required to

employer gave you that

party) for expenses shown in Step 1

file Form 2106, enter your expenses

were not reported to you

that were not reported to you in box 1

directly on Schedule A (Form 1040),

in box 1 of Form W-2 . . . .

of your Form W-2. This includes

line 20 (or Schedule A (Form

reimbursements reported under code

2. Enter the total amount of

1040NR), line 9).

“L” in box 12 of Form W-2. Amounts

your expenses for the

reported under code “L” are

Line 5. Enter your allowable meals

periods covered by this

reimbursements you received for

and entertainment expense. Include

reimbursement . . . . . . . . .

business expenses that were not

meals while away from your tax home

3. Of the amount on line 2,

included as wages on Form W-2

overnight and other business meals

enter your total expense for

because the expenses met specific

and entertainment.

meals and entertainment . .

IRS substantiation requirements.

Standard meal allowance.

4. Divide line 3 by line 2.

Instead of actual cost, you may be

Generally, when your employer

Enter the result as a

able to claim the standard meal

pays for your expenses, the

decimal (rounded to

allowance for your daily meals and

payments should not be included in

three places) . . . . . . . . . .

incidental expenses while away from

box 1 of your Form W-2 if, within a

your tax home overnight. Under this

reasonable period of time, you:

5. Multiply line 1 by line 4.

•

method, instead of keeping records of

Enter the result here and

Accounted to your employer for the

your actual meal expenses, you

in Column B, line 7 . . . . . .

expenses, and

•

deduct a specified amount,

Were required to return, and did

6. Subtract line 5 from line 1.

depending on where you travel.

return, any payment not spent (or

Enter the result here and

However, you must still keep records

considered not spent) for business

in Column A, line 7 . . . . . .

to prove the time, place, and

expenses.

business purpose of your travel.

If these payments were included in

Step 3—Figure Expenses

The standard meal allowance is

box 1, ask your employer for a

the federal M&IE rate. For most small

To Deduct on Schedule A

corrected Form W-2.

localities in the United States, this

(Form 1040 or Form 1040NR)

rate is $39 a day for the period from

Accounting to your employer.

January 1 through December 31,

This means that you gave your

Line 9. Generally, you can deduct

2006. Most major cities and many

employer documentary evidence and

only 50% of your business meal and

other localities in the United States

an account book, diary, or similar

entertainment expenses, including

qualify for higher rates. You can find

statement to verify the amount, time,

meals incurred while away from home

these rates on the Internet at www.

place, and business purpose of each

on business. However, if you were an

gsa.gov. At the GSA home page click

expense. You are also treated as

employee subject to the Department

on “Per Diem Rates.” At the Domestic

having accounted for your expenses

of Transportation (DOT) hours of

Per Diem Rates page select “2006”

if either of the following applies.

service limits, that percentage is

•

for the rates in effect for the period

Your employer gave you a fixed

increased to 75% for business meals

January 1, 2006 – September 30,

travel allowance that is similar in form

consumed during, or incident to, any

2006. Select “2007” for the period

to the per diem allowance specified

period of duty for which those limits

October 1, 2006 – December 31,

by the Federal Government and you

are in effect.

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Instructions For Form 2106 - Employee Business Expenses - 2006 Page 3

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