Step 2: Enter reimbursements received from your employer for expenses listed in Step 1

Line 7: Enter reimbursements received from your employer (or third party) for expenses shown in Step 1 that were not reported to you in box 1 of your federal Form W-2. This includes reimbursements reported under code L in box 12 of federal Form W-2. (Amounts reported under code L are reimbursements you received for business expenses that weren’t included as wages on federal Form W-2 because the expenses met specific IRS substantiation requirements.)

Generally, when your employer pays for your expenses, the payments should not be included in box 1 of your federal Form W-2 if, within a reasonable period of time, you:

accounted to your employer for the expenses; and

were required to return, and did return, any payment not spent (or considered not spent) for business expenses.

If these payments were incorrectly included in box 1, ask your employer for a corrected federal Form W-2.

Accounting to your employer means that you gave your employer documentary evidence and an account book, diary, log, statement of expenses, trip sheets, or similar statement to verify the amount, time, place, and business purpose of each expense. You are also treated as having accounted for your expenses if either of the following applies:

Your employer gave you a fixed travel allowance that is similar in form to the per diem allowance specified by the federal government and you verified the time, place, and business purpose of the travel for that day; or

Your employer reimbursed you for vehicle expenses at the standard mileage rate or according to a flat rate or stated schedule, and you verified the date of each trip, mileage, and business purpose of the vehicle use.

For more information, see Itemized deductions and review the 2017 federal Form 2106.