More on Misc Deductions

Q.What are some general types of itemized deductions that are subject
to the 2%-of-AGI floor?
A. Employment expenses (including qualified transportation and education
expenses), investment expenses (other than interest), job-seeking expenses,
hobby expenses to the extent of hobby income, and expenses for
tax preparation and advice.
Q.Which expenses are reported on line 20?
A. Unreimbursed employment-related expenses.
Q.Under what circumstances may unreimbursed employee expenses
be reported directly on Schedule A, line 20, rather than on
Form 2106 or 2106-EZ and then on line 20?
A. When the taxpayer is not claiming meal, entertainment, travel, or transportation
expenses or any reimbursed expenses.
Q.What are deductible transportation expenses?
A. Those that involve the use of a motor vehicle for business purposes.
Q.What is commuting?
A. Driving back and forth to the regular place of work. Commuting expenses
are not deductible.
Q.Describe the optional method of deducting transportation
expenses.
A. Using the standard mileage rate of 50.5¢ per mile before July 1, 2008, and
58.5¢ after June 30, 2008, rather than actual vehicle expenses.
Q.What conditions must be met to qualify to use the optional
method?
A. The taxpayer must own or lease the vehicle, must not use it for hire (for
example, as a taxicab), must not have had more than four vehicles in
simultaneous business use at any time during the year, and must use the
optional method the first year the car or truck is placed in service.
Q.What educational expenses may be deducted by an employee on
Schedule A?
A. Education intended to maintain or improve the taxpayer’s current job
skills.
Q.What other tax options are available for employees taking jobrelated
courses?
A. They may instead claim a lifetime learning credit or a tuition and fees
deduction, assuming all the requirements are met. For example, the education
must be provided by an eligible educational institution to claim
either of these benefits. More on this in another post.
The taxpayer should examine all available options and select the most
beneficial tax treatment.
Q.What is the primary requirement to deduct job-seeking expenses?
A. The taxpayer must be seeking employment in the same occupation in
which he is currently or was most recently employed.
Q.What are some employee expenses that can be claimed directly on
line 20 without using Form 2106 or 2106-EZ?
A. Some examples are union dues, subscriptions to work-related publications,
dues to professional organizations, cost of physical exams required
by the employer, cost of small tools and safety equipment, and the cost and
cleaning of specialized clothing required by the employer and not adaptable
to general wear.

Oct 29 2009

Kim Isaac Greenblatt