Tips to Reduce Your Taxes with Miscellaneous Deductions
Saturday, September 7, 2013, 1:00 AM | Leave Comment
Before you know it, tax season will be upon us. It’s less than four months away. For many folks, it’s like hurricane season. However, when you think ahead and are prepared for it, it’ll be like a morning breath of fresh air – a welcome relief. So far as deductions go, some folks will take standard deductions where the amount is fixed by IRS.
However, if you itemize deductions on your tax return, you may be able to deduct certain miscellaneous expenses that you could miss taking. You may benefit from this because a tax deduction normally reduces your federal income tax.
There are two types of miscellaneous deductions you should know about and they are as follows:
-
Deductions Subject to the Two Percent Limit
The way the 2 % limit works is you total up all your allowable expenses, and subtract 2 percent of your adjusted gross income (AGI) as shown on Line 33 of your Form 1040. If anything remains, that is the amount you can deduct as an itemized deduction on Line 26 of Schedule A. You can deduct most miscellaneous expenses only if they exceed 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 profession
-
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 of AGI limit. If you have any of these, they are totaled up and reported on Line 27 of your Schedule A. Some expenses on this list include:
-
Certain casualty and theft losses. This deduction applies if you held the damaged or stolen property for investment. Property that you hold for investment may include assets such as stocks, bonds, and works of art
-
Gambling losses up to the amount of gambling winnings
-
Losses from Ponzi-like investment schemes.
-
Many expenses are not deductible. For example, you can’t deduct personal living or family expenses. Report your miscellaneous deductions on Schedule A, Itemized Deductions. Be sure to keep records of your deductions as a reminder when you file your taxes in 2014.
Learn more about these rules in the IRS booklet known as Publication 529, Miscellaneous Deductions. You can also get it by calling 800-TAX-FORM (800-829-3676).
In a Nutshell
Why bother with such details on your own. I don’t. I use TaxACT for filing my tax return. TaxACT walks you through hundreds of deductions quickly and easily for your guaranteed maximum refund. Prepare, print and e-file your Form 1040 tax return, Schedule A and all e-fileable federal forms FREE with TaxACT Free Federal Edition.
