Instructions For Form 2106 - Employee Business Expenses

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Department of the Treasury

Internal Revenue Service

Instructions for Form 2106

Employee Business Expenses

Section references are to the Internal Revenue Code.

section 179 deduction for most

An ordinary expense is one that is

General Instructions

vehicles eligible for the 50% special

common and accepted in your field of

allowance (including vehicles for

trade, business, or profession. A

Changes To Note

which you elect the 30% allowance)

necessary expense is one that is

is increased to $10,710. If you elect

helpful and appropriate for your

Standard mileage rate. The

out of both the 30% and 50% special

business. An expense does not have

standard mileage rate is 36 cents for

allowances, this limit is $3,060. For

to be required to be considered

each mile of business use in 2003.

trucks and vans, the first-year limit is

necessary.

increased by $300 (regardless of

Special depreciation allowance.

You may be able to file Form

whether the 30% or 50% special

The special depreciation allowance

2106-EZ, Unreimbursed Employee

allowance applies). For more details,

increases from 30% to 50% for most

Business Expenses, provided you

see page 7.

new vehicles acquired after May 5,

use the standard mileage rate (if

2003. If the 50% allowance applies,

claiming vehicle expense) and were

Purpose of Form

you may elect to use the existing 30%

not reimbursed by your employer for

allowance or elect out entirely for any

Use Form 2106 if you are an

any expense. See Form 2106-EZ to

class of property. For more details,

employee deducting ordinary and

find out if you qualify to file it.

see page 5.

necessary expenses for your job. See

the flowchart below to find out if you

Limit on depreciation and the

must file this form.

section 179 deduction. The

first-year limit on depreciation and the

Who Must File Form 2106

Do not file Form 2106.

A Were you an employee during the year?

See the instructions for Schedule C, C-EZ, E, or F.

Yes

Did you have job-related business expenses?

Do not file Form 2106.

Yes

Are you claiming job-related vehicle,

Were you reimbursed for any of your business

travel, transportation, meals, or

File Form 2106 (but

expenses (count only reimbursements your employer

entertainment expenses?

see Notes below).

did not include in box 1 of your Form W-2)?

Yes

Are you a fee-basis state or local government official,

a qualified performing artist, or an individual with a

Did you use a vehicle in your job in 2003 that

disability claiming impairment-related work expenses?

you also used for business in a prior year?

See the line 10 instructions for definitions.

Do not file Form 2106. Enter expenses on Schedule A

(Form 1040), line 20. These expenses include business

Are your deductible expenses more than your

gifts, education (tuition and books), home office, trade

reimbursements (count only reimbursements your

publications, etc.

employer did not include in box 1 of your Form W-2)?

For rules covering employer reporting of reimbursed

expenses, see the instructions for line 7.

Yes

Do not file Form 2106.

Is either 1 or 2 true?

Yes

Notes

1 You owned this vehicle and used the actual

● Generally, employee expenses are deductible only on

expense method in the first year you used the

line 20 of Schedule A (Form 1040). But fee-basis state or

File Form 2106 (but

vehicle for business.

local government officials, qualified performing artists,

see Notes).

and individuals with disabilities should see the

2 You used a depreciation method other than

instructions for line 10 to find out where to deduct

straight line for this vehicle in a prior year.

employee expenses.

● Do not file Form 2106 if none of your expenses are

Yes

deductible because of the 2% limit on miscellaneous

File Form 2106.

itemized deductions.

Cat. No. 64188V

Instructions For Form 2106 - Employee Business Expenses - 2003

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