Managing your miscellaneous deductions is very important and could be worth money to you. As your income increases, so does the two percent floor that you must over come in order to start deducting miscellaneous deductions. Here are a few tips to watch for in your tax planning.
Miscellaneous Deductions Can Cut Taxes
You may be able to deduct certain miscellaneous costs you pay during the year. Examples include employee expenses and fees you pay for tax advice. If you itemize, these deductions could lower your tax bill.
Here are some things the IRS wants you to know about miscellaneous deductions:
Deductions Subject to the Two Percent Limit. You can deduct most miscellaneous costs only if their total is more than two percent of your adjusted gross income. These include expenses such as:
- Unreimbursed employee expenses.
- Expenses related to searching for a new job in the same line of work.
- Certain work clothes and uniforms.
- Tools needed for your job.
- Union dues.
- Work-related travel and transportation.
Deductions Not Subject to the Two Percent Limit. Some deductions are not subject to the two percent limit. They include:
- Certain casualty and theft losses. Generally, this applies to damaged or stolen property that you held for investment. This includes items such as stocks, bonds and works of art.
- Gambling losses up to the amount of your gambling winnings.
- Losses from Ponzi-type investment schemes.
There are many expenses that you can’t deduct. For example, you can’t deduct personal living or family expenses. You claim allowable miscellaneous deductions on Schedule A, Itemized Deductions.
Additional IRS Resources:
- Tax Topic 508 – Miscellaneous Expenses
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