Don't Overlook the Benefits of Miscellaneous Deductions
By: Stephen Crews
Updated: August 20, 2012
If
you are able to itemize your deductions on your tax return instead of
claiming the standard deduction, you may be able to claim certain
miscellaneous
deductions. A tax deduction reduces the amount of your taxable income
and generally reduces the amount of taxes you may have to pay.
Here are some things you should know about miscellaneous tax deductions:
Deductions Subject to the 2 Percent Limit. You can deduct the amount of certain miscellaneous
expenses that exceed 2 percent of your adjusted gross income. Deductions subject to the 2 percent limit include:
- Unreimbursed employee
expenses such as searching for a new job in the same profession, certain
work clothes and uniforms, work tools, union dues, and work-related
travel and transportation.
- Tax preparation fees.
- Other expenses that you pay to:
- Produce or collect taxable income,
- Manage, conserve, or maintain property held to produce taxable income, or
- Determine, contest, pay, or claim a refund of any tax.
Examples of other expenses include certain investment fees and expenses, some legal fees, hobby expenses that are not more than your hobby income and rental fees for a safe deposit box if it is not used to store jewelry and other personal effects.
Deductions Not Subject to the 2 Percent Limit. The list of deductions not subject
to the 2 percent limit of adjusted gross income includes:
- Casualty and theft losses from income-producing property such as damage or theft of stocks, bonds, gold, silver, vacant lots, and works of art.
- Gambling losses up to the amount of gambling winnings.
- Impairment-related work expenses of persons with disabilities.
- Losses from Ponzi-type investment schemes.
Qualified
miscellaneous deductions are reported on Schedule A, Itemized
Deductions. Keep records of your miscellaneous deductions to make it
easier for
you to prepare your tax return when the filing season arrives.
There
are also many expenses that you cannot deduct such as personal living
or family expenses. You can find more information and examples in IRS
Publication
529, Miscellaneous Deductions, which is available on IRS.gov or by
calling 800-TAX-FORM (800-829-3676).
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Links:
- Publication 529, Miscellaneous Deductions (PDF)
- Tax Topic 508 - Miscellaneous Expenses
- Schedule A Itemized Deductions (PDF)
- Instructions for Schedule A (PDF)
YouTube Videos:
- Standard Versus Itemized Deductions - English | Spanish | ASL
- Record Keeping - English | Spanish | ASL
Podcasts:
