Employee business expenses are deductible only to the extent that their total, when combined with other miscellaneous deductions, exceeds 2% of Adjusted Gross Income. This eliminates the deduction for many employees. A deduction for these kinds of items can be preserved by having the company pay for them through an expense account or other reimbursement program. That’s because a corporation can deduct these kinds of costs as a business expense without reference to the 2%-of-Adjusted Gross Income rule. (The company’s deduction for business meals and entertainment is, however, limited to 50% of the cost.)
