W-2 paychecks & overtime

W-2 employee expenses (not deductible)

Last verified: 2 min read Rule card + research brief
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W-2 job costs: reimbursement, not a deductionLeft: W-2 costs such as mileage, scrubs, license renewals, and CEUs are not deductible. Right: ask your employer or agency to reimburse them under its accountable plan; reimbursements are tax-free to you.Not deductible on W-2• W-2 mileage• Scrubs• License renewals• CEUs and similar costsDo this instead• Keep logging the cost• Ask for reimbursement under an accountable plan• Reimbursements are tax-free to you
W-2 job costs: reimbursement, not a deduction

The rule (settled)

TCJA suspended miscellaneous itemized deductions, including unreimbursed employee expenses, for 2018–2025. OBBBA §70110 made that permanent. The remaining exceptions don't fit a staff or agency nurse: Armed Forces reservists, fee-basis officials, qualifying performing artists, impairment-related work expenses, and eligible K-12 educators. (Notice 2026-10)

What it means for you

  • W-2 mileage, scrubs, license renewals, CEUs, and similar costs are not deductible.
  • Keep logging them anyway: they're evidence for reimbursement requests.
  • Reimbursements under an accountable plan are tax-free to you.
  • If the same cost relates to your 1099 work, such as an LNC course or a license used for consulting, log it under the 1099 job instead.

What to do instead

  • Ask your employer or agency to reimburse these under its accountable plan, since reimbursements are tax-free.
  • Also check whether it offers §127 educational assistance: up to $5,250/yr tax-free, which OBBBA §70412 made permanent and which can include student-loan principal and interest payments. The amount is indexed after 2026. (Rev. Proc. 2025-32 §2.09)

Watch: W-2 vs. 1099: what changes

Narrated explainer · 57 seconds · spoken narration with on-screen captions

Transcript
  1. A W-2 job and a 1099 job at the same hourly rate are taxed differently.
  2. W-2 mileage, scrubs, license renewals, and CEUs aren't deductible. Ask for reimbursement under an accountable plan instead.
  3. 1099 work opens Schedule C deductions, the 20% QBI deduction, and a SEP-IRA or Solo 401(k).
  4. But it adds self-employment tax: 15.3% on 92.35% of net profit, about 14.13% of profit.
  5. Example with made-up numbers: at the same $55 an hour, the 1099 offer took home about $925 less.
  6. Research, not tax advice. Confirm with a CPA or EA before filing.

What to keep

  • A log of W-2 job costs, kept as evidence for reimbursement requestsFrom: W-2 expenses card

Sources

Research, not tax advice. Confirm with a CPA or EA before filing.