What Is Form 2106?
IRS Form 2106, also known as “Employee Business Expenses,” is a tax form used by employees to claim unreimbursed business expenses. These expenses are often necessary to perform their job duties efficiently but are not reimbursed by their employer. Form 2106 is typically more comprehensive and requires detailed reporting of job-related expenses.
What Is Form 2106-EZ?
Form 2106-EZ, “Unreimbursed Employee Business Expenses,” is a simplified version of Form 2106. It was designed to facilitate the deduction process for employees with uncomplicated situations involving unreimbursed business expenses. Form 2106-EZ is less detailed compared to Form 2106, making it faster and easier to complete. However, it was discontinued for tax years beginning after 2018.
Key Differences
Detailed Reporting vs. Simplicity
- Requires detailed reporting of various job-related expenses, such as vehicle expenses, travel, meals, and entertainment.
- Suitable for employees with a broad range of deductible expenses.
- Allows for more comprehensive deduction options, including vehicle expenses calculated using the actual expense method.
- Simplified and streamlined, requiring fewer details and calculations.
- Intended for employees with a straightforward list of unreimbursed business expenses.
- Limited in scope compared to Form 2106 and discontinued for tax years post-2018.
Filing Considerations
Eligibility Requirements
To use Form 2106, employees must:
- Be reimbursed under a non-accountable plan.
- Be qualified performing artists, fee-based state or local government officials, or employees with statutory role eligibility according to the IRS.
Form 2106-EZ was intended for employees without complex deduction claims but was retired for tax years after 2018.
Deduction Calculation
Form 2106 requires:
- Detailed mileage logs if deducting vehicle expenses using the actual expense method or standard mileage rate.
- Itemized deduction of travel, lodging, and deduction-related miscellaneous expenses.
- Detailed breakdowns of meals and entertainment expenses.
Form 2106-EZ required:
- Basic reporting without the need for intricate mileage logs or breakdowns.
- A focus on simplified calculations for easier deductions.
Examples
Example for Form 2106
An employee travels frequently for business purposes. They incur significant expenses for airfare, meals, lodging, and leased vehicle costs. They must complete Form 2106 to detail each expense, calculate depreciation on the leased vehicle, and report all costs accurately for the most beneficial deduction.
Example for Form 2106-EZ
Before its discontinuation, an employee who only incurred minor, straightforward expenses such as job-related tools or small amounts of mileage for work could utilize Form 2106-EZ. This form made it simpler to claim these expenses without the extensive documentation and calculations required by Form 2106.
Historical Context
Introduction and Evolution
Form 2106 was introduced to streamline the process of claiming business-related employee expenses. Form 2106-EZ was later introduced as a more manageable alternative for employees with less intricate deductions. However, as tax laws evolved, specifically with the passing of the Tax Cuts and Jobs Act (TCJA) 2017, Form 2106-EZ was rendered obsolete for tax years starting after 2018.
Comparisons and Related Terms
Related IRS Forms
- Schedule A: Used for itemized deductions, including unreimbursed business expenses reported on Form 2106.
- Form 2106: The more detailed form for separating various deductions.
Terminology
- Unreimbursed Business Expenses: Costs incurred by employees related to their job that are not reimbursed by the employer.
- Accountable Plan: A reimbursement or expense allowance arrangement that requires an employee to substantiate expenses.
Frequently Asked Questions (FAQs)
Q: Can I still use Form 2106-EZ?
A: No, Form 2106-EZ has been discontinued for tax years beginning after 2018.
Q: What expenses can be reported on Form 2106?
A: Various business-related expenses, including travel, lodging, meals, vehicle expenses, and other job-related costs.
Q: How do I qualify to use Form 2106?
A: You must be a qualified performing artist, fee-basis state or local government official, or an employee eligible based on a statutory role as per IRS guidelines.
Summary
IRS Form 2106 and its simplified counterpart, Form 2106-EZ, were essential for employees claiming unreimbursed business expenses. While Form 2106 allows for detailed reporting and extensive deductions, Form 2106-EZ offered a simpler path for straightforward expense claims but has since been discontinued. Understanding these forms is crucial for employees seeking to maximize their tax deductions efficiently.
References
- Internal Revenue Service (IRS). “Instructions for Form 2106, Employee Business Expenses.”
- U.S. Government Publishing Office (GPO). “Tax Cuts and Jobs Act of 2017.”
This guide ensures you make informed decisions about claiming business expenses and navigating the intricacies of IRS forms for optimal tax benefits.
