Form 2106-EZ: Unreimbursed Employee Business Expenses Overview

August 24, 2024 3 min read Taxes Accounting Tax Forms Deductions IRS Unreimbursed Expenses Employee Expenses

A comprehensive overview of IRS Form 2106-EZ, used by employees to deduct ordinary and necessary job-related expenses not reimbursed by their employers.

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Form 2106-EZ was a simplified tax form issued by the Internal Revenue Service (IRS) to allow employees to deduct ordinary and necessary work-related expenses that were not reimbursed by their employers.

Key Components and Usage

Form 2106-EZ was utilized for various specific deductions, and understanding its components is crucial:

Ordinary Expenses: Typical expenses accepted in your field of work.
Necessary Expenses: Expenses needed to perform your job effectively.

Steps to Complete the Form

Completing Form 2106-EZ required the following steps:

Employee Information: Entering personal details including name and social security number.
Business Expenses: Detailing unreimbursed expenses such as travel, meals, and other work-related costs.
Total Expenses: Summing up all listed expenses.
Adjustments and Limitations: Applying any necessary adjustments based on IRS regulations.

Eligibility and Special Considerations

Not all employees were eligible to use Form 2106-EZ. Below are some important considerations:

Simplification Criteria: For employees without employer reimbursements and no depreciation needs.
Employment Types: Usually applicable to W-2 employees, excluding those claiming various deductions.

Historical Context

Introduced to streamline the filing process for employees with unreimbursed expenses, Form 2106-EZ was part of a broader IRS effort to simplify tax reporting. However, it was discontinued after the Tax Cuts and Jobs Act (TCJA) of 2017, which eliminated the deduction for unreimbursed employee business expenses starting in 2018.

Applicability and Current Alternatives

While Form 2106-EZ is no longer in use, understanding its historical context is useful for tax history:

Form 2106: The standard version still used for specific circumstances, especially for armed forces reservists, qualified performing artists, and fee-basis government officials.
TCJA Impact: Assessing alternatives under current tax laws.

Form 2106 vs. Form 2106-EZ: The former offers more comprehensive options for deduction but requires more detailed reporting.
Unreimbursed Expenses: Differentiating from reimbursed expenses to ensure proper classification under tax law.

FAQs

Can I still file Form 2106-EZ for tax years after 2017?

No, the form is no longer valid for filing after tax year 2017 due to changes introduced by the TCJA.

What alternatives exist for claiming unreimbursed expenses now?

Review IRS Form 2106 instructions for eligible taxpayers such as reservists or performing artists.

How did the TCJA affect employees with unreimbursed expenses?

The TCJA eliminated the deduction for these expenses, significantly impacting filing for many employees.

References

Summary

Form 2106-EZ provided a simpler way for employees to deduct unreimbursed business expenses, playing a crucial role until its discontinuation post-TCJA. Understanding its application, history, and the resulting changes remains essential for comprehending current tax regulations and their evolution.