Gurian CPA Firm | Still Time to Act to Avoid 2014 Tax Surprises

Earlier this week we talked about deducting expenses related to your hobby.  In addition to business and/or hobby expenses, you may be able to deduct certain miscellaneous costs you pay during the year. Examples include employee expenses and fees you pay for tax advice. If you itemize, these deductions could lower your tax bill.  Here are some things the IRS wants you to know about miscellaneous deductions:

Deductions Subject to the Two Percent Limit.  You can deduct most miscellaneous costs only if their total is more than two percent of your adjusted gross income. These include expenses such as:

• Unreimbursed employee expenses.
• Expenses related to searching for a new job in the same line of work.
• Certain work clothes and uniforms.
• Tools needed for your job.
• Union dues.
• Work-related travel and transportation.

Deductions Not Subject to the Two Percent Limit.  Some deductions are not subject to the two percent limit. They include:

• Certain casualty and theft losses. Generally, this applies to damaged or stolen property that you held for investment. This includes items such as stocks, bonds and works of art.
• Gambling losses up to the amount of your gambling winnings.
• Losses from Ponzi-type investment schemes.

There are also many expenses that you can’t deduct. For example, you can’t deduct personal living or family expenses. Allowable miscellaneous deductions are claimed on Schedule A, Itemized Deductions.

It’s also worth the reminder that itemizing your deductions is only necessary when they amount to more than the standard deduction. For 2013, the standard deduction was $6,100 for single filers, $12,200 for couples married filing jointly, and $8,950 for head of household. Other rules apply to the standard deduction depending on other factors such as age and dependents.