Form 2106-EZ Guide for Australians: Unreimbursed Employee Business Expenses Explained

If you’re an Australian working for a US-based employer, or you have US tax obligations, you may have heard of Form 2106-EZ. While not an Australian tax form, it’s still relevant for many cross-border workers and expats. With the US tax landscape shifting in 2025, understanding unreimbursed employee business expenses—and how they’re reported—is critical for avoiding costly mistakes and maximising your deductions.

What Is Form 2106-EZ and Why Does It Matter?

Form 2106-EZ was a simplified IRS form used to claim unreimbursed employee business expenses. Historically, it allowed employees to deduct certain job-related costs not reimbursed by their employer, such as work-related travel, uniforms, or equipment. While the IRS discontinued this form after 2017 for most taxpayers due to changes in the US tax code, it still applies in limited scenarios for specific employee categories in 2025.

• Key point for Australians: If you work in the US or for a US company, and you’re not fully reimbursed for work expenses, you may need to understand the legacy and current rules around Form 2106-EZ.

• Who can still use it? Certain groups like Armed Forces reservists, qualified performing artists, and fee-basis government officials may still claim unreimbursed expenses using the main Form 2106 (the EZ version is obsolete for most).

• Australian context: These rules are only relevant if you’re a dual resident, expat, or otherwise subject to US tax.

2025 Policy Updates: What’s Changed for Employee Business Expenses?

The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated most miscellaneous itemised deductions—including unreimbursed employee business expenses—for tax years 2018 through 2025. However, in early 2025, US Congress debated the possible return of these deductions for some taxpayers as inflation and remote work trends continued to bite.

• As of June 2025, Form 2106-EZ remains obsolete for most employees, but you may still use Form 2106 if you’re in a qualifying group.

• Legislative proposals are under review to reinstate certain deductions for remote employees and hybrid workers, but no final changes have passed as of this writing.

• If you’re unsure, check the latest IRS updates or consult a tax professional with US-Australia expertise.

For Australians with US ties, keep in mind:

• Work-from-home expenses are typically not deductible on US returns under current rules, even if your employer is in another country.

• Australian tax law is different: you may be able to claim certain employee business expenses (such as home office costs) on your Australian tax return, provided you meet ATO substantiation requirements.

Claiming Unreimbursed Employee Expenses: Real-World Examples

Let’s consider a few practical scenarios for 2025:

• Case 1: Australian in the US as a performing artist. You’re working on a US stage production and incur out-of-pocket travel and costume costs. You may still use Form 2106 to claim these as unreimbursed expenses if not reimbursed by your employer.

• Case 2: Dual resident working remotely. You live in Sydney but work for a San Francisco-based company. Under current US rules, you generally cannot claim home office or internet expenses as unreimbursed employee business expenses on your US return, unless you qualify under a special category.

• Case 3: Reservist on US military orders. You incur travel costs for drills or meetings. You can claim these on Form 2106, but not the 2106-EZ.

Always keep thorough records—receipts, employer reimbursement policies, and evidence of expenses. The IRS and ATO both scrutinise these claims.

Australian Tax Implications

For most Australians, the main relevance of Form 2106-EZ is understanding the difference in tax treatment between the US and Australia:

• ATO rules: Australian employees can often claim work-related expenses, including travel, uniforms, and some home office costs, if not reimbursed by their employer. Substantiation is crucial.

• Dual tax agreements: If you’re subject to US and Australian tax, the US-Australia tax treaty determines where you pay tax and claim deductions. Double-dipping is not allowed.

• Recordkeeping: Keep detailed records in both currencies. Digital apps can help track expenses across borders.

What To Watch For in 2025

• Policy watch: With remote and international work on the rise, both the IRS and ATO are reviewing their treatment of employee expenses. Stay tuned for possible changes to deduction eligibility.

• Compliance: Claim only what you’re entitled to, and ensure expenses are not reimbursed by your employer.

• Cross-border complexity: If you’re an Aussie with US tax ties, seek cross-jurisdictional tax advice to optimise your position and avoid errors.