Key Takeaways
- Form 2106-EZ deducted unreimbursed employee business expenses.
- Used pre-2018; suspended by Tax Cuts and Jobs Act.
- Simplified form for standard mileage and basic expenses.
- Required detailed records and receipts for deductions.
What is Form 2106-EZ: Unreimbursed Employee Business Expenses?
Form 2106-EZ was a simplified IRS form used by employees to deduct unreimbursed ordinary and necessary business expenses before tax year 2018. These expenses included vehicle use, travel, meals, and other job-related costs not reimbursed by your employer.
This form was designed for straightforward cases, unlike the full Form 2106, and is no longer available due to changes from the Tax Cuts and Jobs Act. Understanding this form ties into broader concepts like your ability to pay taxation and how deductions affect your taxable income.
Key Characteristics
Form 2106-EZ streamlined expense reporting for employees without reimbursements. Key features include:
- Eligibility: Only for employees with unreimbursed ordinary and necessary expenses; self-employed individuals did not qualify.
- Expense Types: Covered vehicle mileage, parking, tolls, travel, and 50% of business meals, excluding interest and taxes.
- Simplicity: Used the standard mileage rate for one vehicle, avoiding complex calculations that require the full Form 2106.
- Limitations: Expenses had to exceed 2% of your adjusted gross income (AGI) to be deductible as miscellaneous itemized deductions.
- Recordkeeping: Required receipts for lodging and expenses over $75, plus logs for mileage and meal details.
How It Works
To use Form 2106-EZ, you calculated your unreimbursed business expenses by multiplying your business miles by the IRS standard mileage rate or by totaling actual expenses if eligible. You then subtracted any reimbursements not reported in your W-2 to find your net deduction.
This net amount was deductible only if it exceeded 2% of your AGI and was reported on Schedule A as a miscellaneous itemized deduction. Because these deductions are suspended for most taxpayers under current tax law, understanding this form provides historical context and insight into employee expense deductions.
Examples and Use Cases
Before 2018, many professionals used Form 2106-EZ to claim deductions for unreimbursed expenses. Examples include:
- Salespeople: An employee driving 10,000 miles annually for work could claim the standard mileage rate, similar to expenses incurred by airline employees at companies like Delta.
- Travel Professionals: A consultant attending client meetings could deduct airfare and lodging costs, paralleling travel patterns in industries related to Delta or other major carriers.
- Meal Expenses: Deducting 50% of business meals while traveling overnight or entertaining clients, similar to expenses tracked by frequent business travelers and daytraders (daytrader) managing multiple client meetings.
Important Considerations
Since 2018, unreimbursed employee business expenses are generally nondeductible for most taxpayers due to the Tax Cuts and Jobs Act. However, certain categories such as Armed Forces reservists or qualified performing artists may still use Form 2106 (not EZ) for specific deductions.
If you are reviewing past tax years or planning deductions, maintaining thorough records and understanding your eligibility is crucial. Also, consider consulting guides on best business credit cards to manage expenses efficiently and best online brokers if your role involves investment activities that impact your taxable earnings (earnings).
Final Words
Form 2106-EZ was a streamlined way for employees to deduct unreimbursed business expenses before 2018, but it’s no longer applicable due to tax law changes. If you have past tax years to amend or review, verify eligibility carefully to maximize your deductions. Consider consulting a tax professional to explore any remaining opportunities for prior years.
Frequently Asked Questions
Form 2106-EZ was a simplified IRS form used before 2018 for employees to calculate and deduct unreimbursed ordinary and necessary business expenses like vehicle, travel, and meals. It is no longer available for tax years 2018 and later due to changes in tax laws.
Only employees who had unreimbursed ordinary and necessary job-related expenses, received no employer reimbursement reported in box 1 of their W-2, and did not claim these expenses on Schedule A could use Form 2106-EZ. It was intended for simpler cases using the standard mileage rate for one vehicle.
You could report vehicle expenses using the standard mileage rate, parking and tolls, travel costs like airfare and lodging away from home, and other necessary supplies. Meals related to business travel or client meetings could be deducted at 50% with proper substantiation.
You would total your eligible expenses, subtract any employer reimbursements not included in your W-2 box 1, then reduce the net amount by 2% of your adjusted gross income (AGI). Only the amount exceeding this 2% floor was deductible as a miscellaneous itemized deduction on Schedule A.
Yes, you needed to keep receipts for lodging and expenses over $75, maintain mileage logs with dates and purposes, and document details for meals and entertainment including who attended and the business reason. These records were important in case the IRS requested proof.
No, Form 2106-EZ was discontinued starting with the 2018 tax year because the Tax Cuts and Jobs Act suspended miscellaneous itemized deductions for unreimbursed employee expenses through 2025.
Form 2106-EZ was a simpler version designed for employees using the standard mileage rate for a single vehicle and straightforward expenses. The full Form 2106 was used for more complex situations like actual vehicle expenses or multiple vehicles.
Due to tax law changes, you generally cannot deduct unreimbursed employee business expenses for tax years 2018 through 2025 unless you are in certain categories like Armed Forces reservists. It's best to consult current IRS guidance or a tax professional.
