Miscellaneous Deductions

As the season of tax has arrived, you should be alert and keep a watch on recent news so that you can file your tax return easily as well as can also decrease tax amount.  You can deduct definite miscellaneous expenses such as consultation fees for tax services that you incur during the year. If you keep a record of all your expenses, you may perhaps be able to decrease the amount of taxes you owe.

If you desire to claim miscellaneous deductions on your tax form, below are the things you should keep in mind:

Deductions Subject to the 2% Limit

You can claim deduction of definite expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR) but the amount you can deduct in most miscellaneous expenses has to be more than two percent of your adjusted gross income. You cipher your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total sum of these expenses. Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37.

Deductions subject to the 2% limit are discussed in the following categories:

  • Employee expenses are unreimbursed (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7)
  • Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 8)
  • Expenses incurred through a job hunt in same line of work
  • The cost of buying tools or uniforms for your job
  • Union dues
  • Business voyage.

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You can deduct unreimbursed employee expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. You can deduct only unreimbursed employee expenses that are:

  • Remunerated or acquired during your tax year,
  • For carrying on your trade or business of being an employee, and
  • Ordinary and necessary.

An expense is defined as ordinary if it is normal and usual in your trade, business, or job. An expense is necessary if it is apt and supportive to your business.

Some of the unreimbursed employee expenses are Passport for a business trip, Tools and goods used in your work, Travel, transportation, meals, entertainment, gifts, and local lodging related to your work, Home office or part of your home used regularly and exclusively in your work, Legal fees related to your job, Educator expenses.

Exclusions to the Two Percent Limit:

Certain deductions aren’t requisite to meet the two percent limit. Examples of these deductions are:

  • Loss  that occurred on investment properties, including stocks, bonds, and art pieces
  • Any gambling losses equal to the amount you’ve won

A number of expenses aren’t deductible, despite of your AGI. You can’t deduct every expenses related with individual services or family livelihood. If you to deduct any expenses, you must file it with your regular tax return using Schedule A, Itemized Deductions.