IRS Form 2106 (Employee Business Expenses) and Instructions (2015); Form 2106-EZ (Unreimbursed Employee Business Expenses) (2015)
The IRS has released the 2015 version of Form 2106 (Employee Business Expenses). This form must be attached to the Form 1040s of employees claiming business expense deductions in three situations: (1) the expenses were for work-related vehicles, travel, transportation, meals, or entertainment; (2) the employee was reimbursed on a nontaxable basis for deductible work-related expenses (other than work-related moving expenses, which are reported on Form 3903); or (3) the employee is a reservist, qualified performing artist, government official compensated on a fee basis, or disabled individual who is subject to a special filing rule. A simplified version—Form 2106-EZ—may be used by employees who use the standard mileage rate to claim vehicle expenses (if any) and received no expense reimbursements from their employers other than reimbursements reported as taxable income.
The 2015 Form 2106, Form 2106-EZ, and instructions are substantially similar to the 2014 versions. However, the 2015 items have been revised to reflect that the standard business mileage rate for 2015 is 57.5 cents per mile (up from 56 cents for 2014). The 2015 instructions for Form 2106 note that the inflation-adjusted first-year depreciation deduction limits for vehicles first placed in service in 2015 and the 2015 fair market value threshold for leased vehicles to which an inclusion amount may apply are unchanged from 2014.
EBIA Comment: The accountable plan rules allow employees to avoid tax on business expense reimbursements if three principal requirements are met: the expenses have a business connection; they are adequately substantiated; and any excess reimbursements are returned. If accountable plan reimbursements do not fully cover an employee’s expenses, the employee may be eligible to take a deduction for the unreimbursed expenses, using Form 2106 to calculate the deduction. Among other limitations, expenses may not be deducted unless the employee maintains adequate records to substantiate them. The Instructions reference Publication 463 (Travel, Entertainment, Gift, and Car Expenses) as a source of further details. For more information, see EBIA’s Fringe Benefits manual at Sections II.E (“Employee Business Expense Reimbursements”), IV.B (“What Are the Tax Consequences of a Company Car?”), and IV.F (“Employer Reimbursements for Business Use of an Employee’s Car”).
Contributing Editors: EBIA Staff.