If a company doesn't reimburse sales for expenses, can sales deduct those expenses on their taxes?

I thought it was yes but looks like that changed in 2018, and it's a no:

https://www.hrblock.com/tax-center/filing/adjustments-and-deductions/unreimbursed-employee-expenses/amp/

https://www.efile.com/employee-expenses-tax-deduction/

Definitely Not A Cop said:

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If a company doesn't reimburse sales for expenses, can sales deduct those expenses on their taxes?

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An employee can not. It would be an unreimbursed employee expense. That used to be a miscellaneous itemized deduction subject to a 2% of AGI floor (expense had to exceed 2% of AGI to be deductible. However, as someone else stated, those are no longer deductible.

If you are an independent contractor, then you can deduct sales expenses on your Schedule C. I think it is unlikely that you are an independent contractor if you are inside sales.

Do you qualify as statutory employee?

combat wombat said:

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Definitely Not A Cop said:

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If a company doesn't reimburse sales for expenses, can sales deduct those expenses on their taxes?

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An employee can not. It would be an unreimbursed employee expense. That used to be a miscellaneous itemized deduction subject to a 2% of AGI floor (expense had to exceed 2% of AGI to be deductible. However, as someone else stated, those are no longer deductible.

If you are an independent contractor, then you can deduct sales expenses on your Schedule C. I think it is unlikely that you are an independent contractor if you are inside sales.

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FYI if you haven't seen it yet DOL is in their feedback period for proposed rules changes that are going to make it harder for companies to categorize outside sales reps as 1099 contractors. They're proposing a series of economic tests:

[ol]

The opportunity for profit or loss depending on managerial skill.

The investments by the worker and the employer.

The degree of permanence of the work relationship.

The nature and degree of employer control.

The extent to which the work performed is an integral part of the employer's business.

The worker's use of skill and initiative.

[/ol]
I've got clients with 1099 outside guys and I've told them they're likely going to "fail" items 1, maybe 2, almost certainly 3, probably 4 and definitely 5. This is of course the Democrats effort to force more control over the labor market and to make "sales" a less lucrative career.

There are way too many companies that give employees 1099s.

combat wombat said:

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There are way too many companies that give employees 1099s.

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Oh I understand completely but outside sales reps have always been 1099 and frankly if you're a high performer it's usually a better outcome. These proposed changes are going to make it much harder to categorize an outside rep 1099 which IMO will negatively impact the earnings potential of those guys.