REIMBURSED OR REIMBURSABLE

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In a recent post ather BANKRATE.COM blog titled “Follow Work Expense Tax Claim Rules” Kay Belldiscussed a Tax Court case from last year that “disallowed most of the more than $46,000 in business expenses claimedby a California woman in part because she didn't submit them first to heremployer for reimbursement”.
You may deductunreimbursed “ordinary and necessary” expenses related to your job as a MiscellaneousExpense on Schedule A to the extent that the total of all MiscellaneousExpenses (with a few exceptions – like gambling losses) exceed 2% of yourAdjusted Gross Income (AGI).  Employeebusiness expenses are first reported on Form 2106, or 2106-EZ, and then carriedover to Schedule A.
When it comes toemployee business expenses, similar to the concept of “allowed or allowable”for depreciation, you cannot deduct items that are “reimbursed or reimbursable”by your employer under an “accountable plan”.
The judge in thecourt case that Kay referenced in her post explained -
“A trade or business expense deduction is notallowable to an employee to the extent that the employee is entitled toreimbursement from her employer for an expenditure related to her status as anemployee.  This rule forecloses an avenuefor tax manipulation by preventing the taxpayer from converting a businessexpense of her company into one of her own by simply failing to seekreimbursement.”
Think about it.  If you could be reimbursed by your employerwhy would you not want to be? 
The woman in thecourt case supposedly incurred $46,000 in employee business expenses.  She was, again supposedly, “out of pocket”$46,000.  By deducting these expenses onher Schedule A she would be “reimbursed” perhaps $11,000-$12,000 by “Uncle Sam”(the amount of allowable deductions, after the 2% of AGI reduction, at herfederal tax rate), and maybe some more by her state.  She would still be “out of pocket” over$30,000.  If the employer reimbursed herthe entire $46,000 she would be “out of pocket” $0!  Even if the employer reimbursed only half ofthe expenses she would be better off.
Many, many yearsago, when I was still an "apprentice" tax preparer, one of mymentor’s clients came in and proudly announced that his employer had offered toreimburse him for job-related mileage, but he turned it down because then hewould not be able to deduct business travel on his Form 1040 (back thenemployee business expenses were deductible in full "above-the-line"as an Adjustment to Income). 
My mentor avoidedthe temptation to tell the client that he was a complete idiot, and attemptedto explain, with great patience and tact, that taxes are only pennies on the dollar.  It is much "more better" forsomeone to give you $1.00 tax free than it is to be able to save 30 cents byclaiming a tax deduction.  Similarly,there is no benefit in spending $1.00 needlessly to save 30 cents intaxes.  You have not saved 30 cents – youhave actually lost 70 cents! Also when it comes to employee business expenses you must remember to keep good, contemporaneous records.  And certain types of business deductions require special recordkeeping or additional information.  But that is a subject for another post. 
TTFN