Wiley Tax Preparer: A Guide to Form 1040

CHAPTER 25

Miscellaneous Itemized Deductions

Some deductible expenses may be deducted as miscellaneous itemized deductions, most of which are subject to a floor based on the taxpayer's adjusted gross income (AGI). Specifically, only the total of all such deductions exceeding 2% of the taxpayer's AGI is deductible. However, some miscellaneous deductions are fully deductible without regard to this 2% limit.

Miscellaneous itemized deductions for regular income tax purposes are not deductible for purposes of the alternative minimum tax (AMT) (see Chapter 33).

Miscellaneous Itemized Deductions Subject to the 2% Limit

Most miscellaneous itemized deductions are deductible to the extent they exceed the 2% limit. A taxpayer claims a miscellaneous itemized deduction on Schedule A, Itemized Deductions. The 2% limit is applied after any other limit for a particular type of expense, such as the 50% limit for business meals (explained in Chapter 26).

Three categories of expenses are subject to the 2% limit:

1. Unreimbursed employee business expenses (see Chapter 26)

2. Tax preparation fees

3. Other expenses

Tax Preparation Fees

Fees paid for income tax preparation of a taxpayer's personal income tax return are deductible in the year the fees are paid.

Example

Jerry paid you $350 to prepare his 2012 Form 1040, U.S. Individual Income Tax Return, in April 2013. He can deduct the $350 as a miscellaneous itemized deduction for 2013 (if he is eligible to itemize deductions and to the extent his ...