Can you claim itemized deductions when all of your work was as an agency employee?

Question

All of my work this year was through a temporary agency. I am an "employee" of the agency and receive a W-2. However, they don't cover expenses like health insurance and parking. I pay these myself. Can I write these off on my taxes or can you only take itemized deductions if you receive a1099 as an independent contractor?

In the past I worked as an independent contractor and made many deductions. However, this is the first year I worked 99% through an agency. I only earned about $800 as an independent contractor -- without an agency. My income this year was close to $200K so I'm guessing I can't write anything off. Curses! Thanks for the advice. I had 3 jobs this year (sometimes simultaneously) and on 2 I had taxes taken out but on one I went exempt and I made a little over $72K on that job. Only $11K was deducted for the mandatory tax withholdings. I'm freaking out about how much I will owe! I do own 2 properties so maybe taxes and interest I paid on those may help me???? :0)

Answer 1

You are allowed to itemize deductions. You will use Schedule A of the 1040. If you paid health insurance out of pocket, that is a deductible expense.

Do you have temporary assignments that are estimated to last less than a year? Do you maintain a regular home (i.e. you are not a transient)? If so you can deduct your transportation expenses if you itemize your deductions. These expenses include vehicle expenses and parking. Can be complicated, you may want some help.

If your work assignment is supposed to last more than one year then you cannot deduct transportation expenses.

Answer 2

If you paid private health insurance premiums, then those can be deducted along with other medical expenses. However, you will notice that you can only deduct medical expenses that EXCEED 7.5% of your adjusted gross income - therefore you would need to either have a very low income or very high medical expenses, otherwise the deduction will be disallowed.

Parking may or may not be deductable as unreimbursed business expense. You cannot deduct parking if it was paid at your normal place of business - this is a commuting expense. Commuting expenses to and from work are not deductable, but if you are away from your normal place of work then you can. The question is what is your normal place of business? Either way, unreimbursed business expenses also have a floor in that they must exceed 2% of your adjusted gross income, so unless you paid for a lot of parking, you might as well forget about it!

Answer 3

You can take Employee Business Expenses on a Form 2106 and attach that to your Schedule A if you itemize your deductions. Unlike 1099 income which is adjusted by the deductions you are describing this is calculated as part of your Schedule A and is subject to a limitation of 2% of your AGI. If you normally take standard deductions you can not take this deduction on W-2 income. You should be cautious about taking EBE and Self Employment expenses as this will increase your likelihood of an audit. Should you have those circumstances I would suggest that you consult a tax professional.

Answer 4

If you recieve a W2 you are considered an employee of the temp agency, and therefore not an independent contractor recieving a 1099, so, no, you can't deduct those expenses on a schedule C. Even if you receive a 1099, there are rules and burdens of proof around deducting expenses.