In the past several years of dealing with tax problems, I have seen hundreds of tax returns. Most of the returns were done correctly. But, I have also seen quite a few that were not done correctly. Most, although not all, of the returns with significant problems were “self-prepared,” with people who decided to file taxes online on their own.
I do not completely oppose a person preparing his or her own tax returns. There are many software choices available for that purpose. From what I have seen, they all do a great job of completing the necessary arithmetic and helping one avoid addition and subtraction errors. For a single person with one job who receives one W2 or a couple with one or two W2 jobs, and maybe a mortgage, the self-preparation programs are usually a reasonable solution to tax return preparation. You do not have much data to enter, and the choices on how or where to put the data is limited.
When Your Tax Situation Isn’t So Simple
But, with our very complex tax code, any situation beyond the very simplest requires you to know what information is relevant and where it needs to go in your overall tax return scheme. Are you eligible for the Earned Income Credit (EIC)? Are your daycare expenses deductible? If so, where do they go on the forms? How about your child’s college tuition? Is it deductible? Where? What medical expenses are deductible? Are you liable for any Medicare surtax due to your income level? Or, are you eligible for credits under the Affordable Care Act? Are you an employee who has incurred expenses for work that were not reimbursed by your employer?
As I said earlier, I see a lot of problems with self-prepared returns. A large number of issues arise from inappropriately claimed unreimbursed employee expenses.
Deducting Unreimbursed Employee Expenses:
So, here is a brief checklist for determining if you can deduct unreimbursed employee expenses:
- You must be an employee, that is,
- You get a regular paycheck with taxes withheld;
- At the end of the year, you receive a Form W2 from the employer;
- The expenses must be job related;
- You must submit a request for reimbursement to your employer;
- You may claim only those expense s that exceed the amount reimbursed under your employer’s policy.
Generally, employee expenses are deductible only on line 21 of Schedule A (Itemized Deductions) of Form 1040. Additionally, the miscellaneous deduction is limited to amounts that exceed 2% of your adjusted gross income.
For Information About Whether You Should File Taxes Online on Your Own
If you have any questions about claiming unreimbursed employee expenses, including what should you do if you think you made mistakes in the past, or any other questions about tax return preparation in general, contact your tax preparer or this office.