General States

What does Alabama allow for the deduction for unreimbursed employee expenses?

Contributed by KeriC, TaxPro Agent, FreeTaxUSA

You may itemize your deductions on your Alabama return even if you use the Standard Deduction on your federal return.

Unlike the federal income tax return, an unreimbursed business expense can be from any profession for Alabama purposes.

Alabama uses the federal Form 2106 to compute the amount of Employee Business Expenses deductible. Taxpayers claiming employee business expenses on their Alabama income tax return should ignore the statement on the 2023 federal Form 2106 that indicates that form is "for use only by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses". This statement only applies to the federal income tax return. An unreimbursed business expense can be from any profession for Alabama purposes.

The federal Form 2016 should be used to compute the amount of Employee Business Expenses deductible for Alabama if:

You claim any travel, transportation or meal expenses for your job; OR
Your employer paid you for any of your job expenses.

If 1 or 2 applies, federal Form 2106 should be completed manually, and the net deductible amount entered into the software.

For additional information see Page 20 at Alabama unreimbursed employee expenses