Unfortunately, there are some deductions that don’t fit into one tax category. Those miscellaneous deductions can help reduce taxable income and the amount of taxes owed. You might not know for instance, that your employee uniform can be a work expense that you can deduct from your taxes. But if you choose to write off certain miscellaneous deductions, you must then itemize your deductions instead of taking the standard deduction on your tax return.
If you do decide to itemize your deductions, here are a few things to keep in mind.
The Two Percent Limit
Most miscellaneous costs are only deductible if the sum of those deductions exceeds 2% of your adjusted gross income (AGI). That means for example if your AGI is $100,000, you must come up with $2,000 in miscellaneous deductions before you can deduct certain expenses. These expenses 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. This includes the cost paid for tax preparation software or any fee paid for e-filing a return.
Now while you must reach the 2% threshold for those deductions, there are others that are not subject to the limit at all. These include:
• Certain casualty and theft losses. For most cases, this rule is for damaged or stolen property held for investment. It can include property you have such as stocks, bonds and works of art.
• Gambling losses
• Losses from Ponzi-type investment schemes
Despite these rules, there are things you cannot deduct. These include personal living or family expenses. To claim your miscellaneous deductions, you must use the Schedule A form, itemized deductions.
If you’re not sure what deductions you should claim or you need help preparing your taxes, Polston Tax Resolution and Accounting can help you. We have a team of tax preparers and accountants who know which deductions you are able to take and which ones will help you get the biggest refund. Schedule a free consultation now or give us a call at 844-841-9857
