What Does Unreimbursed Mean? Expenses, Deductions, and Records

An unreimbursed expense is any cost you pay yourself that no employer, insurance company, or other third party pays back. For federal tax purposes, unreimbursed expenses matter because some of them can be deducted and most cannot: since 2018, ordinary W-2 employees lost the ability to deduct unreimbursed work costs, and that change is now permanent. Self-employed workers, a handful of specific employee categories, patients with high medical bills, and charitable volunteers still have real deductions available.

What Counts as Unreimbursed

Paying out of pocket isn’t enough on its own. An expense is only unreimbursed once it’s clear no refund, reimbursement, or insurance payment will offset the cost. If your employer runs an expense reimbursement policy and you simply never file the claim, the IRS still treats the cost as reimbursable, because repayment was available to you. The same logic applies to a medical bill you chose not to submit to your insurer. The expense has to genuinely fall outside any available reimbursement channel before it counts as unreimbursed for tax purposes.

Why Most Employees Can No Longer Deduct Work Expenses

Before 2018, W-2 employees could deduct unreimbursed work expenses — tools, uniforms, travel, professional dues — as miscellaneous itemized deductions, though only the portion above 2% of adjusted gross income counted. The Tax Cuts and Jobs Act of 2017 suspended that deduction for tax years 2018 through 2025.¹

The suspension was set to expire after 2025, but the One Big Beautiful Bill Act, signed into law on July 4, 2025, removed the expiration and made the elimination permanent. The statute now bars miscellaneous itemized deductions for any tax year beginning after December 31, 2017, with no end date.¹

So if you’re a salaried or hourly employee and you buy your own supplies, pay for continuing education, or cover travel your employer won’t repay, none of that goes on your federal return. Your practical option is to ask your employer to set up an accountable reimbursement plan, which lets the company pay you back tax-free.

Employees Who Can Still Deduct Unreimbursed Work Costs

A short list of workers is exempt from the permanent elimination. They claim the expenses on Form 2106 and carry the deductible amount to Schedule 1 as an adjustment to income, which lowers adjusted gross income whether or not they itemize.²

Armed Forces reservists can deduct travel expenses for reserve duties that take them more than 100 miles from home, up to the federal per diem rates for lodging and meals.³
Qualified performing artists — those who worked for at least two employers during the year and have adjusted gross income of $16,000 or less before the deduction — can deduct performance-related expenses.³
Fee-basis state or local government officials, meaning officials paid in whole or in part by fees rather than salary, can deduct expenses tied to their duties.³
Employees with a disability can deduct impairment-related work expenses that are necessary for them to do the job.²

If you don’t fit one of these categories, Form 2106 isn’t available to you.²

The Educator Expense Deduction

Eligible K–12 teachers, instructors, counselors, principals, and aides who work at least 900 hours during a school year can deduct up to $300 in unreimbursed classroom expenses. If both spouses on a joint return are eligible educators, the combined limit is $600, but neither spouse can claim more than $300.⁴

Qualifying costs include books, supplies, computer equipment and software, and professional development courses related to the curriculum. This is an adjustment to income on Schedule 1, so you get it even if you take the standard deduction.³

Self-Employed and Freelance Workers

The elimination of miscellaneous itemized deductions doesn’t touch people who work for themselves. If you’re a sole proprietor, independent contractor, or freelancer, you deduct ordinary and necessary business expenses directly on Schedule C. These aren’t itemized deductions. They reduce your business income before it flows into the rest of your return, so they cut both income tax and self-employment tax.

Common deductible costs include supplies, advertising, professional services, software subscriptions, business travel, and 50% of business meals. Each expense must be ordinary (common in your line of work) and necessary (helpful and appropriate for the business).

Home Office

If you use part of your home exclusively and regularly as your principal place of business, you can deduct a share of housing costs. Two methods exist. The actual-expense method allocates mortgage interest, utilities, insurance, and repairs by square footage and uses Form 8829. The simplified method claims $5 per square foot of dedicated office space, up to 300 square feet, capped at $1,500, and goes straight on Schedule C. Under either method, the deduction can’t exceed your gross business income for the year.⁵

Self-Employed Health Insurance

Premiums you pay for your own medical, dental, or qualifying long-term care insurance are generally deductible as an adjustment to income on Schedule 1 using Form 7206. Coverage can include you, your spouse, and your dependents. You can’t claim the deduction for any month you were eligible for a subsidized health plan through a spouse’s employer or another source, and it can’t exceed your net self-employment income for the year.

Unreimbursed Medical and Dental Expenses

Whether you’re an employee, self-employed, or retired, you can deduct unreimbursed medical and dental expenses on Schedule A, but only the portion above 7.5% of your adjusted gross income. If your AGI is $60,000, only medical costs above $4,500 count.⁶

Qualifying costs include doctor and hospital bills, prescription medications, dental work, vision care, mental health treatment, and long-term care services, provided no insurance or other source reimbursed you. Cosmetic procedures generally don’t qualify unless they correct a deformity from a congenital abnormality, injury, or disfiguring disease.

Because of the 7.5% floor, the deduction mostly helps in a year with unusually high medical costs. If your total unreimbursed medical spending stays below the threshold, none of it produces a deduction.

Paying With an HSA Instead

If you have a high-deductible health plan, a Health Savings Account is another route. Withdrawals used to pay qualified medical costs — doctor visits, prescriptions, dental care, vision expenses — come out tax-free. The expense has to have been incurred after you established the HSA, and you can’t use the same expense for both an HSA withdrawal and a Schedule A deduction. There’s no deadline for taking the distribution, so you can pay a bill now and reimburse yourself years later, as long as you keep documentation linking the withdrawal to the expense.⁷

Volunteer Expenses for Charity

You can’t deduct the value of your time as a volunteer, but you can deduct out-of-pocket costs you pay while volunteering for a qualified charitable organization, as long as the charity doesn’t reimburse you and the costs are directly connected to the volunteer work rather than personal or family expenses.⁸

Driving for volunteer work is deductible at 14 cents per mile, plus parking and tolls. General car maintenance, insurance, and depreciation aren’t deductible.⁹
Uniforms required for the volunteer role are deductible, including cleaning costs, as long as they aren’t suitable for everyday wear.⁸
If a charity chooses you as its delegate to a convention, you can deduct travel, meals, and lodging, but only if the trip has no significant element of personal recreation.⁸
Supplies and materials you buy specifically for the activity, like ingredients for a charity bake sale, are deductible.

Volunteer costs are claimed as charitable contributions on Schedule A, so you have to itemize to benefit.⁸

Records You Need to Keep

For any unreimbursed expense, the IRS expects documentation showing what you spent, when, to whom, and why. That means the date, amount, payee, and a description tying the item to the deduction you’re claiming.¹⁰

Save receipts, bank statements, invoices, and mileage logs. For vehicle expenses, record each trip’s date, destination, purpose, and miles. Digital copies work as long as they’re legible and complete. Keep supporting documents for at least three years from the filing date, because the IRS generally has three years to audit a return.¹¹

Will Itemizing Actually Help

Several of the deductions above — medical expenses above 7.5% of AGI, charitable volunteer costs — only reduce your tax bill if your total itemized deductions beat the standard deduction for your filing status.¹²

For tax year 2026, the standard deduction is $16,100 for single filers and married filing separately, $32,200 for married filing jointly and surviving spouses, and $24,150 for head of household.¹³

Deductions that are adjustments to income — the educator expense deduction, self-employed health insurance, and expenses claimed on Form 2106 by reservists, performing artists, and the other exempt employees — come off your income before you choose between the standard deduction and itemizing. You get those either way. Only the Schedule A items require itemizing to produce any tax benefit.

1
Office of the Law Revision Counsel. 26 U.S. Code 67 – 2-Percent Floor on Miscellaneous Itemized Deductions
2
Internal Revenue Service. Instructions for Form 2106
3
Office of the Law Revision Counsel. 26 U.S. Code 62 – Adjusted Gross Income Defined
4
Internal Revenue Service. Topic No. 458, Educator Expense Deduction
5
Internal Revenue Service. Topic No. 509, Business Use of Home
6
Internal Revenue Service. Publication 502, Medical and Dental Expenses
7
Internal Revenue Service. Distributions for Qualified Medical Expenses
8
Internal Revenue Service. Publication 526, Charitable Contributions
9
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
10
Internal Revenue Service. What Kind of Records Should I Keep
11
Internal Revenue Service. Managing Your Tax Records After You Have Filed
12
Internal Revenue Service. Tax Basics: Understanding the Difference Between Standard and Itemized Deductions
13
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill