Miscellaneous deductions may reduce tax bills by allowing certain expenses, including those paid for by employees as part of their employment. To claim these costs, taxpayers must itemize deductions when they file. Many taxpayers claim the standard deduction, but some might pay less tax by itemizing.

The two-percent limit   Taxpayers can deduct most miscellaneous costs only if their sum is more than two percent of adjusted gross income. These include expenses such as:

  • Unreimbursed employee expenses
  • Job search costs for a new job in the same line of work
  • Tools for the job
  • Union dues
  • Dues to professional societies
  • Work-related travel and transportation
  • The cost paid to prepare the tax return – these fees include the cost for tax preparation software and e-filing fees
  • Investment fees and expenses

Deductions not subject to the limit   Some deductions are not subject to the two-percent limit. They include:

  • Certain casualty and theft losses – in most cases, this rule is for damaged or stolen property held for investment and may include property such as stocks, bonds and works of art
  • Gambling losses up to the total of gambling winnings
  • Losses from Ponzi-type investment schemes

Some expenses that can’t be deducted include personal living or family expenses. For more information, please contact your Miller Cooper representative.

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