Title: What Is Form 2106 (Employee Business Expenses)? — A Practical Guide
Brief overview
Form 2106, Employee Business Expenses, is an IRS form used to calculate ordinary and necessary unreimbursed job expenses that certain employees may claim on their federal tax return. Because of tax law changes (the Tax Cuts and Jobs Act of 2017, effective for tax years 2018–2025), most employees can no longer deduct unreimbursed employee business expenses. Form 2106 is now available only to a limited set of taxpayers defined by the IRS (see “Who can file” below).
Key sources: IRS Instructions for Form 2106; IRS About Form 2106; IRS Standard Mileage Rates; Investopedia summary of Form 2106.
Who can file Form 2106?
As of the current IRS guidance, the only employees eligible to use Form 2106 are:
– Armed Forces reservists (when travel expenses are incident to performing reserve duties away from home),
– Qualified performing artists,
– Fee-basis (fee-based) state or local government officials, and
– Employees with impairment-related work expenses (expenses for a disabled employee needed to perform the job).
If you don’t fall into one of these categories, you generally cannot use Form 2106 to deduct unreimbursed employee expenses for tax years after 2017. (IRS, Instructions for Form 2106; Investopedia)
What is Form 2106 used for?
Form 2106 is used to:
– Total your unreimbursed employee business expenses and employer reimbursements (Part I), and
– Compute vehicle-related expense deductions either by the standard mileage method or by actual expenses (Part II).
The net deductible amount (if any) computed on Form 2106 is entered on your tax return where the Form 2106 instructions direct (follow current-year instructions carefully). (IRS, Instructions for Form 2106)
What counts as unreimbursed job expenses?
Typical categories that may be claimed (when you’re an eligible filer) include:
– Vehicle expenses for business travel (not commuting), parking and tolls;
– Business travel away from home (meals, lodging — subject to deduction rules);
– Tools and supplies required for the job;
– Uniforms and special work clothing required and not suitable for everyday wear;
– Professional dues, subscriptions, fees, licensing costs;
– Home office costs if the home office qualifies under IRS rules (rare for employees);
– Impairment-related work expenses for disabled employees (special rules apply).
Commuting (home-to-work) expenses are generally not deductible. Also note that some items (e.g., meals while traveling) may be subject to special limits or percentage-of-cost rules. (IRS, About Form 2106; Investopedia)
Vehicle expense methods (how Part II works)
You have two ways to claim vehicle/business mileage expenses on Form 2106:
1) Standard mileage rate method
– Multiply business miles driven by the IRS standard mileage rate for the tax year.
– The standard rate is intended to cover gas, oil, repairs, maintenance, depreciation, and other car costs.
– The IRS announces the mileage rate each year (example: the IRS announced 70¢/mile for 2025, up from 67¢/mile in 2024 — confirm the current rate on IRS.gov). (IRS, Standard Mileage Rates)
2) Actual expense method
– Add up actual vehicle-related expenses (gasoline, oil, repairs, tires, insurance, registration fees, licenses, depreciation or lease payments subject to limits).
– Keep receipts and records. The IRS has depreciation tables and limits; you cannot deduct personal commuting, and certain interest or personal-use portions are excluded.
You may switch methods only under IRS rules (e.g., if you used accelerated depreciation or claimed certain credits, the standard mileage method may be restricted later). See current instructions before choosing. (IRS, Instructions for Form 2106)
Important tax-law changes and limits
– The Tax Cuts and Jobs Act (TCJA) suspended the “miscellaneous itemized” deduction for unreimbursed employee business expenses that were subject to the 2% adjusted gross income floor through 2025. This elimination is why most employees cannot use Form 2106 for 2018–2025 tax years. Only the limited categories listed above remain eligible. (IRS; Investopedia)
– If you do qualify, follow the Form 2106 instructions and limits carefully (e.g., substantiation rules for mileage and travel, depreciation limits for vehicles).
– Keep in mind that other tax changes (standard deduction increases, inflation adjustments) affect whether itemizing makes sense; for many taxpayers, the standard deduction will exceed itemized deductions. (IRS inflation adjustments)
Practical step-by-step: How to prepare and file Form 2106
1. Confirm eligibility
– Verify that you belong to one of the IRS-eligible categories (reservist, qualified performer, fee-basis official, or impairment-related expenses). If not, do not prepare Form 2106 for unreimbursed employee expenses. (IRS)
2. Gather documentation
– Employer reimbursements or accountable plan statements (Form W-2 reporting of any reimbursements).
– Receipts for expenses (meals, lodging, tools, uniforms, supplies, registrations).
– Mileage log: date, business purpose, start and end locations, miles driven for each trip. (Electronic logs are acceptable if accurate.)
– Vehicle purchase/lease paperwork, insurance, registration, repair invoices if using actual-expense method.
3. Choose vehicle expense method (if you have vehicle expenses)
– Decide between standard mileage or actual-expense method (see limitations and prior-year use rules). Use the IRS standard rate if you choose mileage.
4. Complete Part II (vehicle) if applicable
– Enter total business miles and compute mileage deduction, OR calculate actual vehicle expenses and allocate business portion.
5. Complete Part I (total employee business expenses)
– List other unreimbursed expenses (e.g., tools, travel, supplies, professional dues), subtract reimbursements from employer, and total the deductible amount as instructed.
6. Transfer amounts to your Form 1040 (follow the current-year Form 2106 instructions)
– The instructions specify exactly where to report the resulting figure on your return (Schedule 1 or Schedule A as applicable—follow the form’s instructions for your tax year).
7. Attach Form 2106 and supporting statements
– Attach Form 2106 to your Form 1040 and retain supporting records for at least three years (or longer if required by special rules). Provide additional documentation if the IRS requests it.
8. Review and file
– Consider tax software guidance or a tax professional review if your situation is complex (e.g., partial reimbursements, mixed personal/business vehicle use, depreciation recapture).
Recordkeeping checklist (keep these for substantiation)
– Mileage log with business purpose for each trip.
– Receipts for gas, tolls, parking, repairs, lodging, meals (as applicable), tools and supplies.
– Employer reimbursement records and expense reports.
– Documentation of employer-required uniforms or certifications.
– For impairment-related expenses: medical documentation and bills showing necessary workplace modifications or services.
Examples (simplified)
– Armed Forces reservist: Travel to a reserve duty location 200 miles away — you keep mileage logs and lodging receipts and, if not reimbursed by your employer/Government, you may claim those expenses on Form 2106 if you meet IRS conditions.
– Qualified performing artist: If you are a professional actor/musician and pay unreimbursed expenses for travel, costumes, and agent fees that meet IRS rules, those may be deductible using Form 2106.
When to consult a tax professional
– If you’re unsure about eligibility for Form 2106.
– If you have mixed employer reimbursements, accountable plan issues, or complex vehicle depreciation.
– If your expenses are large relative to your income or tax situation (affects audit risk and substantiation requirements).
The bottom line
Form 2106 allows a small set of employees to claim ordinary and necessary unreimbursed job expenses. Because TCJA suspended the miscellaneous itemized deduction for most employees through 2025, only Armed Forces reservists, qualified performing artists, certain fee-based government officials, and employees with impairment-related work expenses can use Form 2106. If you qualify, carefully document expenses, choose the correct vehicle method, complete Parts I and II as applicable, and attach Form 2106 to your tax return per the IRS instructions.
Primary sources and further reading
– IRS — Instructions for Form 2106, Employee Business Expenses: https://www.irs.gov/forms-pubs/about-form-2106
– IRS — About Form 2106, Employee Business Expenses: https://www.irs.gov/forms-pubs/about-form-2106
– IRS — Standard Mileage Rates: https://www.irs.gov/tax-professionals/standard-mileage-rates
– IRS — IRS Releases Tax Inflation Adjustments (for tax year announcements): https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
– Investopedia — Form 2106: Employee Business Expenses (overview): https://www.investopedia.com/terms/f/form-2106.asp
If you’d like, I can:
– Walk through a sample filled Form 2106 with numbers, or
– Help you build a mileage log template and expense checklist tailored to your situation. Which would you prefer?