Making the Most out of Miscellaneous Deductions

The following article was published by the IRS.

man at deskMiscellaneous deductions are tax breaks that generally don’t fit into a particular tax category. They can help reduce taxable income and the amount of taxes owed. For example, some employees can deduct certain work expenses like uniforms as miscellaneous deductions. To do that, they must itemize their deductions instead of taking the standard deduction on their tax return.

Here are several tips from the IRS about miscellaneous deductions:

  • The Two Percent Limit. Most miscellaneous costs are deductible only if the sum exceeds 2% of the taxpayer’s adjusted gross income (AGI). For example, before being able to deduct certain expenses, a taxpayer with $50,000 in AGI must come up with more than $1,000 in miscellaneous deductions. Expenses may include:
  • Unreimbursed employee expenses.
  • Job search costs for a new job in the same line of work.
  • Job tools.
  • Union dues.
  • Work-related travel and transportation.
  • The cost paid to prepare a tax return. These fees include the cost paid for tax preparation software. They also include any fee paid for e-filing a return.
  • Deductions Not Subject to the Limit. Some deductions are not subject to the 2% limit. They include:
  • Certain casualty and theft losses. In most cases, this rule is for damaged or stolen property held for investment. This may include property such as stocks, bonds and works of art.
  • Gambling losses up to the total of gambling winnings.
  • Losses from Ponzi-type investment schemes.
  • Taxpayers can’t deduct some expenses. For example, personal living or family expenses are not deductible.

To claim allowable miscellaneous deductions, taxpayers must use Schedule A, Itemized Deductions. For more about this topic, see Publication 529, Miscellaneous Deductions. Get them on IRS.gov/forms at any time.

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About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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