What Is IRS Form 2106?

Man playing acoustic guitar and singing on stage
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DEFINITION

Filing IRS Form 2106 with your federal Form 1040 tax return allows you to claim an above-the-line adjustment to income for "Employee Business Expenses." The deduction is reserved for a few select workers, including performing artists who work as employees.

Definition and Example of Form 2106

Form 2016 is a tax form used by employees to file for federal tax deductions on business expenses. It is titled "Employee Business Expenses." Employees in specific industries can use Form 2106 to deduct "ordinary and necessary" expenses they incur as they go about their jobs.

The IRS says that "ordinary" means it's a common expense in your trade or profession. "Necessary" effectively means that you could not do your job without spending this money, or at least you couldn't do it conveniently. The expense must be "helpful and appropriate."

Form 2106

You can claim adjustments to income and itemized deductions or the standard deduction.

Who Uses Form 2106?

The professions that qualify for this above-the-line deduction for job-related expenses include:

  • Performing artists
  • Armed forces reservists
  • Fee-based state or local government officials
  • Employees with impairment-related work expenses

The bad news is that not all performing artists will qualify, because the terms and requirements for qualifying are rather strict. The four main qualifications include:

  • Having worked as a performing artist as an employee for at least two employers during the tax year
  • Receiving at least $200 or more from at least two of those employers
  • Having allowable business expenses related to the performing arts of 10% or more of your gross income in the performing arts
  • Having an adjusted gross income (AGI) of $16,000 or less before deducting expenses as a performing artist

Where to Get Form 2106

Form 2106 is available from the IRS online. You can complete it online, download it, or print it out and fill it in by hand. Make sure you have the most recent tax year's version of the form.

How to Fill Out Form 2106

Form 2106 has just three required sections on its first page. Enter your expenses in Step 1, then move on to Step 2 if your employer reimbursed you for any of them. This information should appear in box 12 of your W-2 Form under code "L." Step 3 walks you through the calculations necessary to arrive at your deduction.

You need only complete the second page of Form 2106 if you used your vehicle for work during the year. The second page starts with Part II.

Section A of Part II on the second page details your auto expenses. Next, you'll complete either Section B or Section C. Your choice depends on whether you want to claim the standard mileage rate or use your actual vehicle expenses and deduct a percentage of them. If you deduct the percentage, you use a figure equal to the percentage of miles you drove for work versus the overall miles driven.

The standard mileage rate is $.56 per mile for the 2021 tax year, the return you'll file in 2022. However, you might find that using a percentage of your actual auto expenses provides a better deduction, so do both calculations before deciding.

Complete Section D to depreciate your vehicle only if you own the car in question and claim your actual vehicle expenses, not the standard mileage rate.

You can transfer the amount that appears on line 10 of Form 2106 to line 12 of Schedule 1, "Additional Income and Adjustments to Income." The total for your adjustments to income from Schedule 1 is then entered on line 10 of Form 1040.

Can Form 2106 Be E-Filed?

IRS Form 2106 accompanies your Form 1040, which can be e-filed right along with your tax return. The IRS offers several e-filing options, including one you can access for free if your income was $72,000 or less in tax year 2021.

Where to Mail Form 2106

The address to which you'd mail a paper return to the IRS depends on your state and whether you're enclosing payment. The IRS provides info for each state on its website, telling you the address you should use.

Requirements for Filing Form 2106

The qualifying rules for performing artists are somewhat different than those for armed forces reservists, fee-based state and local government officials, and those with impairment-related work expenses.

Performing Artists

Performing artists qualify if they provide services in the arts for two or more employers and receive at least $200 in wages from those jobs. Your job-related expenses must be more than 10% of the gross income you earned from these jobs, and your AGI must be $16,000 or less—without regard to this deduction. You can't claim this deduction if you're married and file a separate return unless you lived apart from your spouse throughout the entire tax year.

If you're self-employed or a sole proprietor, or use a loan-out corporation, you can't use Form 2106 for business expenses.

Armed Forces Reservists and Fee-Based Government Officials

You'll also qualify for this adjustment to income if you were a member of one of the seven armed forces reserve components or Public Health Service Reserve Corps. You can deduct expenses for traveling more than 100 miles from your main home, but these are limited to the federal per diem rates for the city you travel to.

Your job-related expenses are also deductible if you are a government official who is compensated entirely or partly on a fee basis.

Impairment-Related Work Expenses

If you are an employee with a disability and have attendant care at your place of work, you have impairment-related work expenses. Any other costs you have in connection with your job that enable you to work also qualify. If you think this applies to you, IRS Publication 463 offers more details.

Key Takeaways

  • IRS Form 2106 reports deductible employee business expenses to the IRS but only for a few qualifying professions, such as performing artists who work as employees.
  • You can get Form 2106 from the IRS's website and e-file it with your Form 1040.
  • Performing artists must meet specific rules before filing Form 2106, such as working for two or more employers and earning a minimum of $200 from both jobs.

Article Sources

  1. Internal Revenue Service. "About Form 2106, Employee Business Expenses."

  2. Internal Revenue Service. "Instructions for Form 2106."

  3. Internal Revenue Service. "Form 2106."

  4. Internal Revenue Service. "General Instructions for Forms W-2 and W-3."

  5. Internal Revenue Service. "Standard Mileage Rates."

  6. Internal Revenue Service. "Schedule 1."

  7. Internal Revenue Service. "Free File: Do Your Federal Taxes for Free."

  8. Internal Revenue Service. "Where to File Paper Tax Returns With or Without a Payment."