What Is Form 2106?

Form 2106 is a tax form used by certain employees to deduct unreimbursed work-related expenses. Officially titled Employee Business Expenses, this form was historically more widely used but has seen its relevance narrowed significantly following changes made by the Tax Cuts and Jobs Act (TCJA) of 2017.

Today, the use of Form 2106 is limited primarily to specific groups of employees, such as Armed Forces reservists, qualified performing artists, fee-basis government officials, and certain employees with impairment-related work expenses. Understanding when and how to use this form is essential for those who still qualify to claim deductions on unreimbursed business expenses.

Purpose of Form 2106

Form 2106 is intended to calculate the amount of allowable deductions for unreimbursed employee business expenses. These are ordinary and necessary costs incurred by an employee in the course of performing their job but which are not reimbursed by the employer. The form helps taxpayers determine the amount that can be reported on Schedule 1 (Form 1040), which then contributes to reducing their overall adjusted gross income (AGI).

Before the TCJA, many employees used Form 2106 to claim a wide range of job-related expenses. After the law took effect in 2018, most employees were no longer allowed to deduct these expenses unless they fell into one of the few qualifying categories.

Who Can Still Use Form 2106?

The TCJA suspended the miscellaneous itemized deduction for unreimbursed employee expenses for most taxpayers from tax years 2018 through at least 2025. However, several categories of workers are still permitted to use Form 2106:

• Armed Forces reservists: Must travel more than 100 miles from home for reserve-related duties.
• Qualified performing artists: Must meet specific income thresholds and perform for at least two employers.
• Fee-basis government officials: Typically those paid on a fee basis rather than a salary.
• Employees with impairment-related work expenses: Only applies to individuals with a physical or mental disability.

These workers can deduct qualified expenses regardless of whether they itemize deductions, since the allowed deductions are classified as adjustments to income rather than itemized deductions.

Types of Deductible Expenses

Eligible expenses vary based on the taxpayer’s profession and must be both ordinary (common and accepted in the trade or business) and necessary (appropriate and helpful for the job). Typical examples include:

• Travel and transportation expenses incurred for work, excluding commuting.
• Business meals and lodging while away from home on a temporary assignment.
• Tools and equipment not reimbursed by the employer.
• Professional dues, subscriptions, or licensing fees required for the job.
• Home office expenses (in limited cases, and usually only for impairment-related work expenses).

The IRS requires that expenses be directly related to the taxpayer’s job and that no reimbursement was received. If an employer has a reimbursement plan that does not cover certain expenses, only those unreimbursed amounts are eligible.

Completing the Form

Form 2106 consists of several sections:

1. Part I requests basic information, such as the occupation and type of vehicle used for work, if applicable.
2. Part II calculates vehicle expenses, offering the option to use either the standard mileage rate or actual expenses. Detailed recordkeeping is essential if the actual expense method is chosen.
3. Part III addresses other business expenses not related to a vehicle.
4. Part IV summarizes total expenses and any employer reimbursements, separating them based on whether the reimbursements were made under an accountable plan.
5. Part V is used to calculate meals and entertainment expense limits, typically subject to a 50% deduction cap.

If deductions are allowed, the final figure from Form 2106 flows to Schedule 1 (Form 1040), contributing to an adjustment to gross income rather than being listed as an itemized deduction on Schedule A.

Recordkeeping and Documentation

Proper documentation is critical when claiming any deductions using Form 2106. Taxpayers should keep:

• Receipts and invoices for all business expenses.
• Mileage logs for vehicle use.
• Proof of business purpose for each expense.
• Employer policies showing whether reimbursements were available.

Since the IRS scrutinizes unreimbursed expenses closely, particularly after the 2018 tax law changes, strong documentation is key to sustaining the deduction in the event of an audit.

Key Limitations and Considerations

Even for eligible taxpayers, there are limitations. For example, only the portion of meal expenses related to business (such as meals while traveling or during client meetings) can be deducted, and usually only at 50%. Personal expenses, commuting costs, and clothing that is adaptable to everyday use are not deductible, regardless of the profession.

Additionally, taxpayers must distinguish between accountable and non-accountable reimbursement plans. Under accountable plans, reimbursements are not taxable and should not be reported as income. In contrast, non-accountable plans report reimbursements as income, and related expenses must be itemized to qualify for a deduction—which, under current law, most employees can no longer do.

The Bottom Line

Form 2106 continues to serve a narrow but important role in the federal tax system. While the vast majority of employees can no longer deduct unreimbursed business expenses, certain categories of workers—such as reservists and performing artists—retain this option. For these individuals, careful attention to eligibility rules, expense documentation, and correct filing procedures remains essential. Understanding the limits and permitted deductions can help ensure accurate reporting and prevent tax compliance issues.