Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Job-Related Expense Deductions Get a Hard Look in Pa

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Job-Related Expense Deductions Get a Hard Look in Pa

Article excerpt

Pennsylvania tax reviewers have been giving extra scrutiny to claimed unreimbursed employee expenses on state income tax filings as part of an initiative to root out intentional or accidental misreporting in recent years.

Taxpayers taking deductions for expenses their jobs require but their employers don't pay for - like union dues, travel costs, equipment purchases, continuing education or uniforms - are now more likely to get a letter from the state seeking documentation to prove the deductions are necessary.

So what can a taxpayer claiming legitimate expenses do to avoid getting an unwelcome letter from the revenue department this spring?

A good first stop is the agency's website. The department published clearer guidance about allowable expenses and supporting documentation after it faced criticism about the initiative's sweep and implementation in 2014, its first year. It also shifted away from denying claims without first seeking documents to back them up.

Early this year, the department gave notice that taxpayers claiming unreimbursed business expenses should provide a verification letter from employers, or submit a copy of the employer's reimbursement policy or a signed affidavit.

Taxpayers can, but are not required to, provide the supporting documents when they file their returns, Department of Revenue spokesman Kevin Hensil said. "If there is a considerable amount of documentation, we recommend taxpayers wait until we contact them," he said.

The value of taxpayers' deductions, and their tolerance for potential scrutiny and delays, can help determine whether it is worth it for them to go through the effort of getting letters from their employers or other documentation before filing their taxes.

"If they are going to save more than a couple hundred dollars of tax, they are going to want to pursue it and they'll put the time into it," said Daria Palaschak, a tax partner with Downtown CPA firm Sisterson & Co. LLP.

On the other hand, she said, "You have to think about what the tax practitioner is going to have to incur in time to direct the client to go get all this stuff and make sure it's sufficient. …

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