Can You Deduct Unreimbursed Employee Expenses? These States Might Let You

can you deduct unreimbursed employee expenses

2 min read

Looking for a tax break on your work-from-home expenses? While you can’t claim these costs on your federal taxes, you might be able to on your state income tax returns if you live in Alabama, Arkansas, California, Hawaii, Minnesota, New York, or Pennsylvania.

The Tax Cuts and Jobs Act, which was enacted in 2018, eliminated the deduction of unreimbursed employee expenses at the federal level, so this is excellent news for those residing in the states mentioned above.

Your Home Office Expenses: What’s Eligible for a Tax Break?

As government-issued orders to stay at home begin to lift, many are still choosing to work from home for a variety of reasons. Perhaps they are taking care of family members or are hesitant to resume normal office operations too soon. Regardless, more people are working remotely today and, in turn, spending more on utility bills and other costs.

So, for those living in any of the seven states mentioned above, what can be claimed as a deduction on their state income tax?

Essentially, you can deduct any extra costs related to your home office, as unreimbursed employee expenses refer to any ordinary and necessary expenses that your employer has not paid you back or given you an allowance for. This could include computer monitors, desks, chairs, etc. You may also be able to deduct a portion of your mortgage interest, rent, and utility bills.

Unreimbursed employee expenses are usually listed as itemized deductions on state income tax returns, meaning that to benefit, your claimed deductions must exceed the standard deduction in that given state.

You Should Keep Records of Everything

We recommend keeping all receipts, statements, and other documentation on hand from any expenses incurred to back up your claims.

Have any further questions on this topic? Please don’t hesitate to reach out to us. We are here to help you with tax planning to ensure you’re getting all the tax breaks you’re entitled to.

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June 30, 2020