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Miscellaneous Itemized Deductions

Miscellaneous Deduction Rules

Miscellaneous deductions include all deductible items not in the categories of medical, taxes, interest, charitable contributions or casualty losses. Deductible miscellaneous deductions are subdivided into two groups: (1) deductible in full and (2) deductible only to the extent they total more than 2% of a taxpayer’s AGI.

List of Major Miscellaneous Deductions Fully deductible:

• Gambling losses, up to the amount of gambling winnings.

• Special job-related expenses of the handicapped (readers, aides).

• Estate taxes already imposed on the same taxable income.

• Unrecovered cost of annuities (on a decedent’s last return).

Subject to 2% floor:

• Appraisal fees (for charitable donation or casualty losses).

• Clerical help and office rent for maintaining investments.

• Employee business expenses, including travel, 50% of meals and  entertainment, supplies, professional books and journals, home office deductions, and depreciation on property used for business such as equipment, tools and vehicles.

• Excess deductions allowed a beneficiary on termination of an estate or trust.

• Fees to collect interest or dividends.

• Hobby expenses, to the amount of hobby income.

• Indirect miscellaneous deductions of pass-through entities.

• Investment expenses.

• IRA or Keogh custodial fees paid directly.

• Job-hunting expenses.

• Job-related education expenses.

• Legal fees for collecting or producing taxable income, keeping a job or obtaining tax advice. Legal fees in a voluntary bankruptcy to the extent attributable to the taxpayer’s business.

• Liquidated damages paid to a former employer for breach of employment contract.

• Loss on deposits in an insolvent or bankrupt financial institution.

• Losses on IRA investments when all amounts in all traditional IRAs have been distributed and total distributions are less than unrecovered basis, if any.

• Medical examinations required by employer.

• Professional and union dues.

• Repayments of income. See Page 5-15.

• Research expenses of a college professor.

• Safe deposit box fees or cost of installing a safe in a home.

• Service charges on dividend reinvestment plans.

• Small tools and supplies.

• Tax preparation or other tax assistance expenses.

• Trust administration fees.

• Undeveloped land management expenses.

• Work clothes and uniforms if required and not suitable for street wear.

Nondeductible expenses:

• Club dues (except for certain business or public service organizations).

• Commuting expenses.

• Credit card fees.

• Funeral expenses.

• Gambling losses in excess of gambling winnings.

• Hobby expenses in excess of hobby income.

• Homeowners’ association assessments (except as business expense, such as for a home office or rental property).

• House repairs and improvements on personal residence.

• Legal fees for divorce (other than for tax work and to collect taxable alimony).

• Licenses and fees (marriage license, dog or cat license, driver’s license, etc.).

• Life insurance.

• Loss from sale of personal residence.

• Parking tickets and other fines for illegal acts.

• Personal living expenses.

• Political contributions.

• Sales tax (except when added to cost of business expenses).

• Telephone expenses of first line for basic local residential service (even if a portion of the use is for business).

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