J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

19.1 2% AGI Floor Reduces Most Miscellaneous Expenses

A floor of 2% of adjusted gross income (AGI) applies to the total of most miscellaneous deductions that are claimed on Schedule A of Form 1040. AGI is the amount on Lines 37 and 38 of Form 1040. The purpose of the floor is to reduce or eliminate such deductions. Only expenses above the floor are deductible.

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Caution

AMT Disallowance

Even if you are able to deduct for regular tax purposes a portion of miscellaneous expenses because they exceed the 2% AGI floor, you will lose the benefit of that deduction if you are subject to alternative minimum tax (AMT). The deduction from Schedule A for miscellaneous expenses (after the 2% floor) must be added back to income in determining whether you are liable for AMT (23.2).

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Miscellaneous expenses subject to the 2% AGI floor include:

• Unreimbursed travel, meals, and entertainment expenses of employees on trips away from home (20.1 and 20.30)
• Taxable reimbursements of job expenses or taxable expense allowances under non-accountable plans (20.34)
• Unreimbursed local transportation costs of visiting clients or customers (19.8)
• Union dues (19.5)
• Professional and business association dues (19.5)
• Work clothes expenses (19.6)
• Cost of looking for a new job (19.7)
• Job agency fees (19.7)
• Tax advice and preparation fees (19.16)
• Appraisal fees related to ...