20.30 Employee Reporting of Unreimbursed T&E Expenses

If you are paid a salary with the understanding that you will pay your own expenses and you pay all of your travel and entertainment (T&E) expenses without reimbursement, you report all of your salary or commission income as shown on Form W-2. You report your expenses on Form 2106 or Form 2106-EZ (19.3). Meals and entertainment are only 50% deductible. You must also keep records (20.28) to support your deduction. The deductible amount from Form 2106 or Form 2106-EZ is entered on Schedule A as a miscellaneous expense subject to the 2% AGI floor (19.1). If your total miscellaneous expenses, including the unreimbursed T&E costs, do not exceed 2% of adjusted gross income, none of the miscellaneous expenses will be deductible.

If your employer has a reimbursement plan but the rules for accountable plans are not met, reimbursements are treated as part of your taxable pay (20.35).