CA FTB ON EMPLOYEE BUSINESS EXPENSES

[Lee B]

Employee Business Expenses | Tax News August 2015

We noticed a large number of taxpayers who claim unreimbursed employee business expenses (EBE) on Schedule A that appear questionable.

In August, we will increase the number of audits for taxpayers deducting EBE on personal income tax returns, starting with the 2011 and 2012 tax years.

Revenue and Taxation Code (R&TC) Section 17201, except as otherwise provided, permits the deduction of all ordinary and necessary business expenses in accordance with Internal Revenue Code (IRC) Section 162.

Valid employee business expenses are defined as:

• Paid or incurred during your tax year.
• Required to carry on a trade or business.
• Ordinary and necessary.
• Not reimbursed by your employer.
• Not eligible to obtain reimbursement from your employer.

We will request taxpayers who claim these expenses to provide their employer's reimbursement policy and other documentation to substantiate their claim.

Your clients can file amended tax return(s) if their business expenses do not qualify.

To assist your clients with understanding what the IRS allows for unreimbursed employee business expenses, refer to IRC Section162 and Treasury Regulations Sections 1.162-1(a

[Jack from Ohio]

You just gotta love Taxifornia!!