Pennsylvania has decoupled from the TCJA reform of the Employee Expense Deduction on the PA Schedule UE. How does this work in Drake Tax?
The Federal Tax Cuts and Jobs Act limits the Federal 2106, Employee Expense Deduction to a specialized group of taxpayers only:
- Qualified performing artist
- Fee-based state or local government official
- Impairment related work expenses
- Armed forces reservist
Form 2106 for federal will only generate if one of the applicable check boxes on screen 2106 is marked. Pennsylvania, however, continues to permit this deduction for all qualifying employees (as in prior years). Due to this difference in requirements, there are two options to claim expenses on the Pennsylvania Schedule UE:
- As in prior years, make entries directly on the Federal 2106 screen.
- Those amounts will be carried automatically to the Pennsylvania UE.
- Federal Form 2106 will not be generated unless one of the checkboxes is marked.
- Important: do not mark the checkbox unless it applies to the return and you need to generate Form 2106 for the federal return. This is not required for the PA Schedule UE to be calculated.
- If you do not want to enter amounts on the Federal 2106 screen, you can make direct entries on the Pennsylvania Schedule UE screen, instead.
- Entries made on this screen will generate the Schedule UE and permit Pennsylvania’s employee expense deduction.
- Do not duplicate entries on both the 2106 and UE screens.
- This screen is located on the Pennsylvania General tab > screen UE. A link to the PA UE screen is also available on the Federal 2106 screen in the upper right State Information section.
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