Editor's note: Unless you are an educator who meets the educator definition for deductions, employees cannot deduct federal unreimbursed expenses. If you are a volunteer or work for a nonprofit, you can deduct most of those items as donations and the associated credit.
Several states allow reimbursements for unreimbursed business expenses, but it varies state to state. Alabama, Arkansas, California, Hawaii, Minnesota, New York and Pennsylvania all provide a deduction for unreimbursed employee business expenses on their respective state income tax returns. For the latest IRS guidelines regarding deductions for unreimbursed expenses click here.
Prior to April 15, you’ll be sitting down to do your taxes for the year or perhaps having a tax professional help you. Whether you are using tax-preparation software, consulting with H&R Block, or going to a personal accountant or tax specialist, now is the time to get your records and documentation in order to help you file correctly and possibly claim deductions. Whether you are a career EMS provider, a per diem employee, an independent contractor, or a volunteer, there are several things to think about this tax season.
W-2 or 1099
If you are a salaried employee, you should have received a W-2 form from your employer by February 1. A W-2 is utilized by the Internal Revenue Service (IRS) to report wages paid to employees and the taxes withheld from them. Employers must complete a W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. Typical W-2s include four copies for federal, state, county, and/or local taxes.
Some employers classify workers as independent contractors. A 1099 is a form issued to an independent contractor to report their income to the IRS. These folks are technically considered contractors, not employees, and since they are self-employed pay their taxes themselves, rather than having them taken out by employers.
Volunteer members receive neither, unless your department issues a check for a uniform allowance or other program where year-end funds are given, outside of a retirement account. In this case you may receive a 1099.
If you work for multiple employers, you should receive a W-2 or a 1099 from each of them.
When you file your income tax, you can opt to take a standard deduction or itemize. A standard deduction is a dollar amount nonitemizers may subtract from their income before income tax is applied. Most folks usually choose whichever results in the lesser amount of tax payable. For 2020 the standard deduction is:
Filing single: $12,400;
Married filing jointly/surviving spouse: $24,800;
Married filing separately: $12,400;
Head of household: $18,650.
What Cannot Be Deducted
The following items cannot be deducted from your taxes:
Expenses related to commuting to and from work if you are a paid employee (volunteers may deduct);
Meals, beverages, and snacks while on duty.
Normally, if the total value of itemized deductions is higher than the standard deduction, you would itemize. Otherwise you should opt for the standard deduction.
With all of this, it is important to keep careful records of all your expenses and purchases during the year. This would include receipts, miles driven, and other records. Some folks do this the old-fashioned way and put receipts in a folder. Others take photos or scan receipts and save them electronically. Either way, if you are audited by the IRS, you will need to provide documentation for any deductions you claim.
Good luck filing and don’t forget the April 15 deadline!
Disclaimer: This article is for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Barry Bachenheimer, EdD, NREMT/FF, is a frequent contributor to EMS World.