Today we’re going to revisit a post that takes a look at writing off miscellaneous expenses.
If you have expenses that qualify as miscellaneous itemized deductions you can deduct the total amount of those expenses only to the extent that they exceed 2% of your adjusted gross income.
There are three types of expenses that are subject to the 2% limit. They are unreimbursed employee expenses tax preparation fees and other expenses.
Certain unreimbursed employee expenses are deductible as miscellaneous itemized deductions on Schedule A. To be deductible the expense must be:
- Paid or incurred in the tax year
- For carrying on your trade or business of being an employee and
- Ordinary and necessary
You can deduct other expenses subject to the 2% limit that you pay to:
- Produce or collect taxable income
- Manage conserve or maintain property held for producing such income or
- Determine contest pay or claim a refund of any tax
Other expenses can include the following:
- Appraisal fees for a casualty loss or charitable contribution.
- Casualty/theft losses from property used in performing tasks as an employee.
- Clerical help and office rent in caring for investments.
- Depreciation on home computers used for investments.
- Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust.
- Fees to collect interest and dividends.
- Hobby expenses but generally not more than hobby income.
- Indirect miscellaneous deductions from pass-through entities.
- Investment fees and expenses.
- Legal fees related to producing or collecting taxable income or getting tax advice.
- Loss on deposits in an insolvent or bankrupt financial institution.
- Loss on traditional IRAs or Roth IRAs when all amounts have been distributed to you.
- Repayments of income.
- Repayments of social security benefits.
- Safe deposit box rental except for storing jewelry and other personal effects.
- Service charges on dividend reinvestment plans.
- Tax advice fees.
- Trustee’s fees for your IRA if separately billed and paid.
With all these different deductions it may be tough to remember what is and isn’t deductible. That is why it is important to have the Lindemeyer CPA team on your side to help you maximize what you can claim on your tax return.