On Schedule A (Form 1040), you may be able to deduct a portion of miscellaneous expenses covering a wide and varied range of items, such as employee travel and entertainment expenses, work clothes expenses, union and employee professional dues, investment expenses, legal expenses, tax preparation expenses, and educational expenses. They share a significant limitation: the 2% of adjusted gross income (AGI) floor. If your expenses do not exceed this floor, you may not deduct them. If the expenses exceed the floor, only the excess is deductible on Schedule A (19.1). However, the deduction (after the 2% floor) must be added back to income in determining if you are subject to AMT (23.2) and if you are, the benefit of the Schedule A deduction is effectively lost. Some miscellaneous expenses, such as gambling losses and impairment-related work expenses, are not subject to the 2% AGI floor.
In addition to the 2% AGI floor, employees who incur unreimbursed meal and entertainment costs face this further restriction: Only 50% of meal and entertainment costs are deductible.
19.1 2% AGI Floor Reduces Most Miscellaneous Expenses
19.2 Effect of 2% AGI Floor on Deductions
19.3 Checklist of Job Expenses Subject to the 2% AGI Floor
19.4 Job Expenses Not Subject to the 2% AGI Floor
19.6 Uniforms and Work Clothes
19.7 Expenses of Looking for a New Job
19.8 Local Transportation Costs
19.10 Computers Bought for Work
19.11 Cell Phones, Calculators, Copiers and Fax Machines
19.13 Employee Home Office Deductions
19.15 Checklist of Deductible Investment Expenses
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