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Military Employee Business Expenses
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Page 1: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Military Employee Business Expenses

Presenter
Presentation Notes
This lesson covers how to determine and claim qualified employee business expenses for members of the Armed Forces, such as the cost of uniforms, education, and travel.
Page 2: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

About Military Employee Business Expenses

• Additional resources listed in L&LT “References” tab

• Review all tips and cautions in the lesson

• Read all examples and sample interviews

• We will review answers to each exercise

2Military Employee Business Expenses

Presenter
Presentation Notes
Review list of references Discuss all tips and cautions in detail. Ask students to read and/or role-play examples and sample interviews. Review answers to each exercise; ask students how they arrived at their answers.
Page 3: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Objectives – Military Employee Business Expenses

• Determine if the taxpayer has military business expenses that can be deducted

• Identify which form to use to report military business expenses

• Time Required: 30 minutes

Military Employee Business Expenses 3

Presenter
Presentation Notes
Review lesson objectives. State the presentation time.
Page 4: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Topics

• Military Employee Business Expenses

• Qualified Uniform Expenses

• Professional Dues

• Educational Expenses

• Deductible Travel Expenses

• Form 2106

4Military Employee Business Expenses

Page 5: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Key Terms

Definitions are always available in the L&LT online Glossary.

• Adjusted Gross Income (AGI)

• Itemized Deductions

• PCS

• Standard Deduction

• TAD

• TDY

5Military Employee Business Expenses

Presenter
Presentation Notes
Adjusted Gross Income (AGI): The taxpayer’s total adjusted gross income (AGI) is the amount that is used to compute some limitations, such as the medical and dental deduction on Schedule A and the credit for child and dependent care expenses. Itemized Deductions: Itemized deductions allow taxpayers to reduce their taxable income based on specific personal expenses. If the total itemized deductions are greater than the standard deduction, it will result in a lower taxable income and lower tax. PCS: Permanent change of station for a military service member. Standard Deduction: An amount, provided by law and based on filing status, age, blindness, and dependency, that taxpayers can deduct from their adjusted gross income before tax is determined. TAD: Temporary additional duty for military service members. (See TDY.) TDY: Temporary duty for military service members. (See TAD.)
Page 6: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Military Employee Business Expenses

6Military Employee Business Expenses

What are some examples?

• Buying and maintaining uniforms

• Dues to professional societies

• Qualified educational expense

• Travel to/from educational programs

• Certain business travel

Presenter
Presentation Notes
Ask students to share what they know about deducting military employee business expenses. Point out that volunteers need to ask questions that identify unreimbursed military work-related expenses because Form 13614-C does not list military employee business expenses. Explain that unreimbursed expenses are reported on Form 2106, Employee Business Expenses, or can be itemized on Schedule A. Point out that miscellaneous itemized deductions are subject to a 2% of AGI limit.
Page 7: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Qualified Uniform Expenses

• Qualified uniform expenses are the cost and upkeep of uniforms and clothing that are:• Specifically required as a condition of employment, and• Not adaptable to general use as regular clothing

• When military regulations prohibit off-duty wear of certain uniforms, service members can deduct the cost andupkeep of those uniforms

• Any nontaxable uniform allowance or reimbursement must be subtracted fromthe deductible expenses

7Military Employee Business Expenses

Presenter
Presentation Notes
Point out that the same rules for claiming a uniform expense apply to active duty personnel and reservists. Review examples and exercises for the topic.
Page 8: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Professional Dues

8Military Employee Business Expenses

• Service members can deduct dues paid to professional societies that are directly related to their trade or business

• Dues paid to clubs, hobby groups, and other professional groups not related to the taxpayer’s profession are not deductible

Presenter
Presentation Notes
Note that an officers’ club or noncommissioned officers’ club does not qualify as a professional society.
Page 9: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Educational Expenses

• Service members can deduct educational expenses if the education:• Is required by employer or by law for the current job• Maintains or improves skills required for present work

• Non-deductible expenses include education that is:• Needed to meet the minimum qualifications for the service member’s

trade or business• Part of a program of study that will qualify

the taxpayer for a new trade or business

• Service members with qualified deductible educational expenses may deduct the cost of travel related to the education if they are regularly employed and are attending school on a temporary basis (less than a year)

9Military Employee Business Expenses

Presenter
Presentation Notes
Point out that education expenses may also qualify as an education credit, which is covered in another lesson. Note that this section relates only to expenses that may be deductible on Schedule A subject to the 2% AGI limit. Review the Col. Wilson case study. Ask: What if Col. Wilson took an advanced aviation course? Answer: He could deduct the expenses because he met the minimum job qualifications and the course improved his skills in his current position. Point out that service members cannot deduct the cost of travel that is itself a form of education, even if it is directly related to their duties.
Page 10: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Deductible Travel Expenses

• For work-related travel expenses incurred while service members are traveling away from home, the expenses are deductible if:• There is a work-related purpose for the travel• Costs are deemed “ordinary and necessary”• Expenses are greater than total of allowances and reimbursements

• Expenses for personal travel, leave, or liberty cannot be deducted

• Reservists’ expenses for temporary active duty may be deductible

• The cost of meals and business-related entertainment incurred during business travel away from a permanent duty station may be deductible

• Certain local transportation and vehicle expenses are deductible

• Service members on temporary work assignments may deduct some travel expenses

10Military Employee Business Expenses

Presenter
Presentation Notes
Prompt students for examples of deductible travel expenses typical for service members. Refer students to Pub 3 for details on “away from home” travel expenses. Ask: For Navy personnel assigned to a ship, is this considered to be a home for travel expense purposes? Answer: Yes. Ask: What is the 100 mile rule for reservists? See topic for answer. Review the standard mileage rates for business miles driven in the current year.
Page 11: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Form 2106

• Service members use Form 2106 , Employee Business Expenses, to calculate itemized deductions when job-related expenses are greater than reimbursements

• For non-reimbursed, job-related expenses for uniforms, professional dues, or education, service members enter miscellaneous deductions subject to 2% of AGI on Schedule A, line 21

11Military Employee Business Expenses

Presenter
Presentation Notes
Discuss factors that determine when Form 2106 and 2106-EZ are used. Review sample interview and sample Form 2106 with class. TaxSlayer Demo: claiming employee business expenses.
http://www.irs.gov/pub/irs-pdf/f2106.pdf
http://www.irs.gov/pub/irs-pdf/p555.pdf
Page 12: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Out of Scope for this Lesson:

• Taxpayers who choose to use actual expenses instead of the standard mileage rate (vehicle-related deductions)

12Military Employee Business Expenses

Presenter
Presentation Notes
Remind students this list may not include ALL out of scope topics.
Page 13: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Summary

• Travel expenses must be ordinary and necessary expenses of temporarily traveling away from home for a person’s job and must be greater than the total of all advances, allowances, and reimbursements received for such expenses

• Form 2106 and Schedule A are used to figure and claim the itemized deduction for employee business expenses that exceed reimbursement

• Reservists who travel more than 100 miles away from home and stay overnight to attend job-related functions or meetings can deduct travel expenses as an adjustment to income

• All other deductible miscellaneous itemized deductions discussed in this lesson are deducted on Schedule A, subject to the 2% AGI limit

13Military Employee Business Expenses

Presenter
Presentation Notes
Review Summary topics from L&LT or 4491
Page 14: cost of uniforms, education, and travel....Military Employee Business Expenses This lesson covers how to determine and claim qualified employee business expenses for members of the

Practice

• Select the practice exercise on deducting military employee business expenses

• Complete the exercise

14Military Employee Business Expenses

Presenter
Presentation Notes
Verify students have correctly completed Form 2106, Schedule A, and Form 1040.

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