If you are an employee of a small business, you will often have business expenses. Some of these business expenses may be unreimbursed by your company. You can deduct them, to some extent, on your income taxes.
If you get a W-2 Wage Statement at the end of the Year
If your wages are reported as regular income; that is, if they are reported on a regular W-2 wage statement at the end of the tax year, then you are considered a regular employee of the company. Your income is reported as wages on Federal Form 1040. Your unreimbursed employee business expenses can only be reported in the Miscellaneous section of Schedule A. Before you start filling out the Miscellaneous section of Section A, be advised that your Miscellaneous Expenses have to add up to 2% of your adjusted gross income before you can claim them as itemized deductions.
In this section of Schedule A, you can claim things such as the cost of uniforms you must wear on your job but aren't paid for by your employer, union dues, and safety equipment. The best thing to do is to look at IRS Publication 529 which specifically lists what you can and cannot deduct under Miscellaneous Expenses. Since it is fairly complicated, this is the best source of information.
If you get a 1099 Miscellaneous Income Statement at the end of the Year
If your wages are reported on a 1099 form, then you are not considered a regular employee of the business but rather as an independent contractor. Any expenses you incur in connection with the job you did for the business cannot be claimed on Schedule A, Miscellaneous Deductions. Instead, as an independent contractor it is assumed you have a business and your business expenses should be claimed on IRS Schedule C under the appropriate category.
