Some workers may be able to deduct eligible work-related expenses from their PA state income tax. The following information can help you determine which expenses are deductible as unreimbursed business expenses. Keep in mind no deduction is allowed on the federal return.
Generally, expenses that may qualify for an itemized deduction include the following. The actual costs cannot have been reimbursed by your employer, even partially.
- Travel and mileage
- Certain mobile phone uses
- Uniforms (required by the employer that are not suitable for street wear.)
- Small tools
- Office supplies
- Professional license fees
- Some moving expenses
- Certain educational costs
- Union dues, agency fees, or initiation fees
Include the following support:
- Detailed documentation for each line item (including copies and a summary page)
- A letter from your employer indicating that the expenditures were necessary and not reimbursed ( REV-757 – Employer Letter Template).
- If an employer letter is not available, submit one of the following:
- A signed affidavit ( REV-775 – Personal Income Tax Employee Business Expense Affidavit) or
- A copy of the employer’s employee expenses reimbursement policy
Should you claim these expenses?
While it always feels good to reduce your taxes, you don’t want to put taxes ahead of simple financial sense. Most tax preparers charge an average of $35 for each PA UE form attached to your return. So, let’s say, for example, you have $1,300 of unreimbursed business expenses, which will save you $40 in PA taxes ($1,300 X 3.07%). You paid $35 for the preparation of the form, leaving you with savings of $5.
By deducting these expenses, you’re increasing the likelihood that PA will audit your return. If they do, PA will deny the tax deduction, access interest, and penalties. Then, you must send PA your supporting documentation mentioned above to secure your tax deduction. This will ensure you have a pen pal for several months.
As an alternative, make sure you find out your company’s policy on employee expense reimbursements. Most companies today have a policy called an accountable reimbursement plan. These plans have a time frame of when an employee must submit their expenses for reimbursement. The employee should get reimbursed by their employer rather than trying to claim the costs on their return.
If you would like to discuss your business or personal tax planning, tax preparation, and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton, PA office to discuss your situation. You can also schedule a consultation at Click Here.
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About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS-licensed Enrolled Agent and a Certified Tax Resolution Specialist who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA. This includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, and West Chester. We also serve clients in Delaware, New Jersey, New York, and throughout the United States.
Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.
