How you treat reimbursements depends on the arrangement you have
with your employer.
There are two basic types of reimbursement arrangements --
accountable plans and nonaccountable plans. You
can tell the type of plan you are reimbursed under by the way the
reimbursement is reported on your Form W-2.
If you are reimbursed under an accountable plan, your employer
should not include any reimbursement in your income in box 1 of your
Form W-2. To be an accountable plan, your employer's
reimbursement arrangement must require you to meet all three of the
- Your expenses must have a business connection -- that
is, your expenses must be deductible under the rules for qualifying
education explained earlier.
- You must adequately account to your employer for your
expenses within a reasonable period of time.
- You must return any reimbursement or allowance in excess of
the expenses accounted for within a reasonable period of time.
Any part of your reimbursement that does not meet all three
rules is considered paid under a nonaccountable plan.
Expenses equal reimbursement.
If your expenses equal your reimbursement, you do not complete Form
2106 or 2106-EZ. Because your expenses and reimbursements are
equal, you do not have a deduction.
If your expenses are more than your reimbursement, you can deduct
your excess expenses. This is discussed later under Where To
Allocating your reimbursements for meals.
Because your excess meal expenses are subject to the 50% limit, you
must figure them separately from your other expenses. If your employer
paid you a single amount to cover both meals and other expenses, you
must allocate the reimbursement so that you can figure your excess
meal expenses separately. You make the allocation as follows:
- Divide your meal expenses by your total expenses.
- Multiply your total reimbursement by the result from (1).
This is the allocated reimbursement for your meal expenses.
- Subtract the amount figured in (2) from your total
reimbursement. The difference is the allocated reimbursement for your
other qualified educational expenses.
Your employer paid you an expense allowance of $2,000 under an
accountable plan. The allowance was to cover all of your expenses of
traveling away from home to take a 2-week training course for work.
There was no indication of how much of the reimbursement was for each
type of expense. Your actual expenses equal $2,500 ($425 for meals +
$700 lodging + $150 transportation expenses + $1,225 for books and
You must allocate the reimbursement between the $425 meal expenses
and the $2,075 other expenses. The allocated reimbursement for meals
is $340 and the allocated reimbursement for other expenses is $1,660,
figured in the following steps.
- You divide $425 (your meal expenses) by $2,500 (your total
expenses). The result is .17.
- You multiply $2,000 (your reimbursement) by .17. The $340
result is the allocated reimbursement for your meal expenses.
- You subtract $340 from $2,000. The $1,660 difference is the
allocated reimbursement for your other qualified educational
Your excess meal expenses are $85 ($425 - $340) and your
excess other expenses are $415 ( $2,075 - $1,660). After you
apply the 50% limit to your meals, you have an educational expense
deduction of $457.50 [($85 x 50%) + $415].
Your employer will combine the amount of any reimbursement or other
expense allowance paid to you under a nonaccountable plan with your
wages, salary, or other pay and report the total in box 1 of your Form
You can deduct your expenses regardless of whether they are more
than, less than, or equal to your reimbursement. This is discussed
later under Where To Deduct Expenses. An illustrated
example of a nonaccountable plan, using Form 2106-EZ, is shown
at the end of this publication.
Reimbursements for nondeductible expenses.
Reimbursements you received for nondeductible expenses are treated
as paid under a nonaccountable plan. You must include them in your
income. For example, you must include in your income reimbursements
your employer gave you for expenses of education that:
- You need to meet the minimum educational requirements for
your job, or
- Are part of a program of study that can qualify you for a
new trade or business.
Where To Deduct Expenses
Self-employed persons and employees report their educational
The following information explains what forms you must use to
deduct your qualified educational expenses.
If you are self-employed, you must report your qualified
educational expenses on the appropriate form used to report your
business income and expenses (Schedule C, C-EZ, or F). If your
educational expenses include expenses for a car or truck, travel, or
meals, report them the same way you report other business expenses for
those items. See the instructions for the form you file for
information on how to complete it.
If you are an employee, you can deduct qualified educational
expenses only if they were not reimbursed by your employer or if they
exceeded your reimbursement. (Amounts your employer paid under a
nonaccountable plan and included in box 1 of your Form W-2 are
not considered reimbursements.)
Include your qualified educational expenses with your deduction for
any other employee business expenses on line 20 of Schedule A (Form
1040). (Special rules for expenses of certain performing artists and
fee-basis officials and for impairment-related work expenses are
explained later.) This deduction is subject to the 2%-of-adjusted-
gross-income limit that applies to most miscellaneous itemized
Form 2106 or 2106-EZ.
To figure your deduction for employee business expenses, including
qualified educational expenses, you generally must complete Form 2106
Form not required.
Do not complete either Form 2106 or 2106-EZ if:
- You were not reimbursed for any of your expenses, and
- You are not claiming travel, transportation, or meal
If you meet both of these requirements, enter the expenses directly
on line 20 of Schedule A (Form 1040). (Special rules for expenses of
certain performing artists and fee-basis officials and for
impairment-related work expenses are explained later.)
Using Form 2106-EZ.
This form is shorter and easier to use than Form 2106. Generally,
you can use this form if:
- You were not reimbursed for any of your expenses, and
- You are using the standard mileage rate if you are claiming
If you do not meet both of these requirements, use Form 2106.
Performing artists and fee-basis officials.
If you are a qualified performing artist, or a state (or local)
government official who is paid in whole or in part on a fee basis,
you can deduct your qualified educational expenses as an adjustment to
gross income rather than as an itemized deduction. Include your
qualified educational expenses with any other employee business
expenses on line 32 of Form 1040. You do not have to itemize your
deductions on Schedule A (Form 1040), and the deduction is not subject
to the 2%-of-adjusted-gross-income limit. You must complete Form 2106
or 2106-EZ to figure your deduction even if you meet the
requirements described earlier under Form not required.
For more information on qualified performing artists, see
Impairment-related work expenses.
If you are disabled and have impairment-related work expenses that
enable you to get qualifying education, you can deduct them on line 27
of Schedule A (Form 1040). They are not subject to the
2%-of-adjusted-gross-income limit. To deduct these expenses, you must
complete Form 2106 or 2106-EZ even if you meet the requirements
described earlier under Form not required.
For more information on impairment-related work expenses, see
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