Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Military Employee Business Expenses

Form 2106

Taxpayer Interview and Tax Law Application

Let's see how a volunteer helps Mary, an Army Reservist, determine how to deduct her employee business expenses. Click here to see the completed Form 2106.

Sample Interview
VOLUNTEER SAYS   MARY RESPONDS
 
You were in the Reserves, as well as working your full-time civilian job. Did you have any expenses associated with that? Well, my unit usually meets at Anderson, which is about 120 miles from here. I had ten round trips during the year, plus we met at Baker five times. That's only 40 miles away. Here's my mileage record.
 
Oh, good. The expenses you have for traveling more than 100 miles away as a reservist can be deducted, even if you can't itemize. Did you have to pay for lodging or meals or parking? I paid $72 for a hotel room each time, and I ate at the mess for about $20 each trip.
 
Did you get any reimbursement? No, I have to pay for it myself.
 
The most we'll be able to deduct on the meals is 50%, but you can take all of the lodging, plus your mileage. The standard mileage rate for business travel is 56 cents per mile. It's different for the drills at the other base, since they're not as far from your home. I have two questions about these trips: when did you make them, and did you leave from your regular job to go to Baker, or was it on a day off? No, those were short meetings on weeknights, so I just drove straight from work.
 
Since you are driving from one job to another, that's deductible too. But only if you can itemize, and it's over 2% of your AGI. Did you have any other work-related expenses? I'm a trauma nurse, and I have to take continuing education courses each year to stay certified. The classes cost $500 once I paid for the books.
 
Did you get reimbursed for any part of that? The military gave me an allowance, but that only covered $400.
 
Then you'll be able to deduct the $100 you paid out of pocket – but only if you can itemize and exceed that 2% limit.  
 
All right, the expenses for traveling more than 100 miles for reserve duties adds up to $1,344, which is ten trips at 56 cents per mile. Add the hotel rooms at $720 and half the meals at $100, and the total is $2,164. We'll deduct that right on the front of the return.  
The other mileage from trips to Baker add up to $224 and the $100 out of pocket for the class will give you a total of $324 for your Schedule A if you can itemize. Now let me ask you some questions about your car so I can complete this form…  
 
Of the $2,488 on line 10 of Form 2106, $2,164 will be entered on line 24 of Form 1040 and the remaining $324 will be entered on line 21, Schedule A. Indicate on Mary's intake and interview sheet that you've addressed these items.