Publication 17
taxmap/pub17/p17-152.htm#en_us_publink1000174068taxmap/pub17/p17-152.htm#en_us_publink1000174070Limit on itemized deductions.(p195)
For 2010, the dollar limitations for itemized deductions based
on your adjusted gross income has expired.
taxmap/pub17/p17-152.htm#en_us_publink1000252453Educator expenses.(p195)
For 2010, the deduction for educator expenses as an adjustment
to income has expired. See Educator Expenses in this chapter.
 | At the time this publication went to print, Congress was
considering legislation that would extend the deduction for educator expenses as
an adjustment to income. If this is not extended, you may be able to claim these
expenses as a miscellaneous deduction. To find out if this legislation was
enacted, and for more details, go to
www.irs.gov/formspubs. |
taxmap/pub17/p17-152.htm#en_us_publink1000252757Certain property eliminated from the definition of listed property.(p195)
For tax years beginning after 2009, cellular telephones and similar
telecommunications equipment has been removed from the definition of listed
property. For more details, go to Publication 529, Miscellaneous Deductions.
taxmap/pub17/p17-152.htm#en_us_publink1000174071Standard mileage rate.(p195)
The 2010 rate for business use of a vehicle is 50 cents per mile.
taxmap/pub17/p17-152.htm#TXMP5eff38d7This chapter explains which expenses you can claim as miscellaneous
itemized deductions on Schedule A (Form 1040). You must reduce the total of most
miscellaneous itemized deductions by 2% of your adjusted gross income. This
chapter covers the following topics.
- Deductions subject to the 2% limit.
- Deductions not subject to the 2% limit.
- Expenses you cannot deduct.
 | You must keep records to verify your deductions. You should
keep receipts, canceled checks, substitute checks, financial account statements,
and other documentary evidence. For more information on recordkeeping, get
Publication 552, Recordkeeping for Individuals.
|
taxmap/pub17/p17-152.htm#TXMP2c5e5fdcUseful items
You may want to see:
Publication 463 Travel, Entertainment, Gift, and Car Expenses 529 Miscellaneous Deductions
535 Business Expenses
587 Business Use of Your Home (Including Use by Daycare Providers)
946 How To Depreciate Property
Form (and Instructions) Schedule A (Form 1040):
Itemized Deductions 2106:
Employee Business Expenses
2106-EZ:
Unreimbursed Employee Business Expenses
taxmap/pub17/p17-152.htm#en_us_publink1000174073You can deduct certain expenses as miscellaneous itemized deductions
on Schedule A
(Form 1040). You can claim the amount of expenses that is more
than 2% of your adjusted gross income. You figure your deduction on Schedule A
by subtracting 2% of your adjusted gross income from the total amount of these
expenses. Your adjusted gross income is the amount on Form 1040, line 38.
Generally, you apply the 2% limit after you apply any other deduction
limit. For example, you apply the 50% (or 80%) limit on business-related meals
and entertainment (discussed in
chapter 26) before you apply the 2% limit.
Deductions subject to the 2% limit are discussed in the three
categories in which you report them on Schedule A (Form 1040).
- Unreimbursed employee expenses (line 21).
- Tax preparation fees (line 22).
- Other expenses (line 23).
Generally, the following expenses are deductible on Schedule
A (Form 1040), line 21.
You can deduct only unreimbursed employee expenses that are:
- Paid or incurred during your tax year,
- For carrying on your trade or business of being an employee,
and
- Ordinary and necessary.
An expense is ordinary if it is common and accepted in your trade, business, or
profession. An expense is necessary if it is appropriate and helpful to your
business. An expense does not have to be required to be considered necessary.
Examples of unreimbursed employee expenses are listed next. The
list is followed by discussions of additional unreimbursed employee expenses.
- Business bad debt of an employee.
- Education that is work related. (See
chapter 27.)
- Legal fees related to your job.
- Licenses and regulatory fees.
- Malpractice insurance premiums.
- Medical examinations required by an employer.
- Occupational taxes.
- Passport for a business trip.
- Subscriptions to professional journals and trade magazines
related to your work.
- Travel, transportation, entertainment, and gifts related to
your work. (See
chapter 26.)
You can deduct insurance premiums you paid for protection against
personal liability for wrongful acts on the job.
taxmap/pub17/p17-152.htm#en_us_publink1000174078If you break an employment contract, you can deduct damages you
pay your former employer that are attributable to the pay you received from that
employer.
taxmap/pub17/p17-152.htm#en_us_publink1000174079You can claim a depreciation deduction for a computer that you
use in your work as an employee if its use is:
- For the convenience of your employer, and
- Required as a condition of your employment.
For more information about the rules and exceptions to the rules
affecting the allowable deductions for a home computer, see Publication 529.
taxmap/pub17/p17-152.htm#en_us_publink1000174080You may be able to deduct dues paid to professional organizations
(such as bar associations and medical associations) and to chambers of commerce
and similar organizations, if membership helps you carry out the duties of your
job. Similar organizations include:
- Boards of trade,
- Business leagues,
- Civic or public service organizations,
- Real estate boards, and
- Trade associations.
You may not be able to deduct that part of your dues that is
for certain lobbying and political activities. See
Dues used for lobbying under
Lobbying Expenses,
later.
In 2009, if you were an eligible educator, you could deduct your
qualified education expenses as an adjustment to income up to $250. If your
ordinary and necessary educator expenses were over that amount, you could deduct
the excess as a miscellaneous itemized deduction subject to the 2% limit. The
provision that allowed qualified educator expenses to be deducted as an
adjustment to income expired at the end of 2009. For 2010, you can deduct
ordinary and necessary educator expenses only as a miscellaneous itemized
deduction (unreimbursed employee business expenses).
| At the time this publication went to print, Congress was
considering legislation that would reinstate the deduction for educator expenses
as an adjustment to income. The find out if this legislation was enacted, and
for more details, go to
www.irs.gov/formspubs. |
taxmap/pub17/p17-152.htm#en_us_publink1000174084If you use a part of your home regularly and exclusively for
business purposes, you may be able to deduct a part of the operating expenses
and depreciation of your home.
You can claim this deduction for the business use of a part of
your home only if you use that part of your home regularly and exclusively:
- As your principal place of business for any trade or business,
- As a place to meet or deal with your patients, clients, or
customers in the normal course of your trade or business, or
- In the case of a separate structure not attached to your home,
in connection with your trade or business.
The regular and exclusive business use must be for the convenience
of your employer and not just appropriate and helpful in your job. Get
Publication 587 for more detailed information and a worksheet.
taxmap/pub17/p17-152.htm#en_us_publink1000174085You can deduct certain expenses you have in looking for a new
job in your present occupation, even if you do not get a new job. You cannot
deduct these expenses if:
- You are looking for a job in a new occupation,
- There was a substantial break between the ending of your last
job and your looking for a new one, or
- You are looking for a job for the first time.
You can deduct employment and outplacement agency fees you pay
in looking for a new job in your present occupation.
taxmap/pub17/p17-152.htm#en_us_publink1000174087If, in a later year, your employer pays you back for employment
agency fees, you must include the amount you receive in your gross income up to
the amount of your tax benefit in the earlier year. (See
Recoveries in chapter 12.)
If your employer pays the fees directly to the employment agency
and you are not responsible for them, you do not include them in your gross
income.
taxmap/pub17/p17-152.htm#en_us_publink1000174090You can deduct amounts you spend for preparing and mailing copies
of a résumé to prospective employers if you are looking for a new job
in your present occupation.
taxmap/pub17/p17-152.htm#en_us_publink1000174091If you travel to an area and, while there, you look for a new
job in your present occupation, you may be able to deduct travel expenses to and
from the area. You can deduct the travel expenses if the trip is primarily to
look for a new job. The amount of time you spend on personal activity compared
to the amount of time you spend in looking for work is important in determining
whether the trip is primarily personal or is primarily to look for a new job.
Even if you cannot deduct the travel expenses to and from an
area, you can deduct the expenses of looking for a new job in your present
occupation while in the area.
You can choose to use the standard mileage rate to figure your
car expenses. The 2010 rate for business use of a vehicle is 50 cents per mile.
See
chapter 26 for more information.
You can deduct the amount you pay each year to state or local
governments for licenses and regulatory fees for your trade, business, or
profession.
taxmap/pub17/p17-152.htm#en_us_publink1000174094You can deduct an occupational tax charged at a flat rate by
a locality for the privilege of working or conducting a business in the
locality. If you are an employee, you can claim occupational taxes only as a
miscellaneous deduction subject to the 2% limit; you cannot claim them as a
deduction for taxes elsewhere on your return.
taxmap/pub17/p17-152.htm#en_us_publink1000174095An "income aid payment" is one that is received under an employer's
plan to aid employees who lose their jobs because of lack of work. If you repay
a lump-sum income aid payment that you received and included in income in an
earlier year, you can deduct the repayment.
taxmap/pub17/p17-152.htm#en_us_publink1000174096If you are a college professor, you can deduct research expenses,
including travel expenses, for teaching, lecturing, or writing and publishing on
subjects that relate directly to your teaching duties. You must have undertaken
the research as a means of carrying out the duties expected of a professor and
without expectation of profit apart from salary. However, you cannot deduct the
cost of travel as a form of education.
taxmap/pub17/p17-152.htm#en_us_publink1000174097Generally, you can deduct amounts you spend for tools used in
your work if the tools wear out and are thrown away within 1 year from the date
of purchase. You can depreciate the cost of tools that have a useful life
substantially beyond the tax year. For more information about depreciation, see
Publication 946.
taxmap/pub17/p17-152.htm#en_us_publink1000174098You can deduct dues and initiation fees you pay for union membership.
You can also deduct assessments for benefit payments to unemployed
union members. However, you cannot deduct the part of the assessments or
contributions that provides funds for the payment of sick, accident, or death
benefits. Also, you cannot deduct contributions to a pension fund, even if the
union requires you to make the contributions.
You may not be able to deduct amounts you pay to the union that
are related to certain lobbying and political activities. See
Lobbying Expenses under
Nondeductible Expenses,
later.
You can deduct the cost and upkeep of work clothes if the following
two requirements are met.
- You must wear them as a condition of your employment.
- The clothes are not suitable for everyday wear.
| It is not enough that you wear distinctive clothing. The
clothing must be specifically required by your employer. Nor is it enough that
you do not, in fact, wear your work clothes away from work. The clothing must
not be suitable for taking the place of your regular clothing.
|
Examples of workers who may be able to deduct the cost and upkeep
of work clothes are: delivery workers, firefighters, health care workers, law
enforcement officers, letter carriers, professional athletes, and transportation
workers (air, rail, bus, etc.).
Musicians and entertainers can deduct the cost of theatrical
clothing and accessories that are not suitable for everyday wear.
However, work clothing consisting of white cap, white shirt or
white jacket, white bib overalls, and standard work shoes, which a painter is
required by his union to wear on the job, is not distinctive in character or in
the nature of a uniform. Similarly, the costs of buying and maintaining blue
work clothes worn by a welder at the request of a foreman are not deductible.
taxmap/pub17/p17-152.htm#en_us_publink1000174102You can deduct the cost of protective clothing required in your
work, such as safety shoes or boots, safety glasses, hard hats, and work gloves.
Examples of workers who may be required to wear safety items
are: carpenters, cement workers, chemical workers, electricians, fishing boat
crew members, machinists, oil field workers, pipe fitters, steamfitters, and
truck drivers.
taxmap/pub17/p17-152.htm#en_us_publink1000174103You generally cannot deduct the cost of your uniforms if you
are on full-time active duty in the armed forces. However, if you are an armed
forces reservist, you can deduct the unreimbursed cost of your uniform if
military regulations restrict you from wearing it except while on duty as a
reservist. In figuring the deduction, you must reduce the cost by any nontaxable
allowance you receive for these expenses.
If local military rules do not allow you to wear fatigue uniforms
when you are off duty, you can deduct the amount by which the cost of buying and
keeping up these uniforms is more than the uniform allowance you receive.
You can deduct the cost of your uniforms if you are a civilian
faculty or staff member of a military school.
taxmap/pub17/p17-152.htm#en_us_publink1000174104You can usually deduct tax preparation fees in the year you pay
them. Thus, on your 2010 return, you can deduct fees paid in 2010 for preparing
your 2009 return. These fees include the cost of tax preparation software
programs and tax publications. They also include any fee you paid for electronic
filing of your return.
taxmap/pub17/p17-152.htm#en_us_publink1000174105You can deduct certain other expenses as miscellaneous itemized
deductions subject to the 2% limit. On Schedule A (Form 1040), line 23, you can
deduct expenses that you pay:
- To produce or collect income that must be included in your
gross income,
- To manage, conserve, or maintain property held for producing
such income, or
- To determine, contest, pay, or claim a refund of any tax.
You can deduct expenses you pay for the purposes in (1) and
(2) above only if they are reasonably and closely related to these purposes.
Some of these other expenses are explained in the following discussions.
If the expenses you pay produce income that is only partially
taxable, see
Tax-Exempt Income Expenses, later, under
Nondeductible Expenses.You can deduct appraisal fees if you pay them to figure a casualty
loss or the fair market value of donated property.
taxmap/pub17/p17-152.htm#en_us_publink1000174108You can deduct a casualty or theft loss as a miscellaneous itemized
deduction subject to the 2% limit if you used the damaged or stolen property in
performing services as an employee. First report the loss in Section B of Form
4684, Casualties and Thefts. You may also have to include the loss on Form 4797,
Sales of Business Property, if you are otherwise required to file that form. To
figure your deduction, add all casualty or theft losses from this type of
property included on Form 4684, lines 35 and 41b, or Form 4797, line 18a. For
other casualty and theft losses, see
chapter 25.
You can deduct office expenses, such as rent and clerical help,
that you have in connection with your investments and collecting the taxable
income on them.
taxmap/pub17/p17-152.htm#en_us_publink1000234768You can deduct the convenience fee charged by the card processor
for paying your income tax (including estimated tax payments) by credit or debit
card. The fees are deductible in the year paid.
taxmap/pub17/p17-152.htm#en_us_publink1000174111You can deduct depreciation on your home computer if you use
it to produce income (for example, to manage your investments that produce
taxable income). You generally must depreciate the computer using the straight
line method over the Alternative Depreciation System (ADS) recovery period. But
if you work as an employee and also use the computer in that work, see
Publication 946.
taxmap/pub17/p17-152.htm#en_us_publink1000174112If an estate's total deductions in its last tax year are more
than its gross income for that year, the beneficiaries succeeding to the
estate's property can deduct the excess. Do not include deductions for the
estate's personal exemption and charitable contributions when figuring the
estate's total deductions. The beneficiaries can claim the deduction only for
the tax year in which, or with which, the estate terminates, whether the year of
termination is a normal year or a short tax year. For more information, see
Termination of Estate
in Publication 559, Survivors, Executors, and Administrators.
taxmap/pub17/p17-152.htm#en_us_publink1000174113You can deduct fees you pay to a broker, bank, trustee, or similar
agent to collect your taxable bond interest or dividends on shares of stock. But
you cannot deduct a fee you pay to a broker to buy investment property, such as
stocks or bonds. You must add the fee to the cost of the property.
You cannot deduct the fee you pay to a broker to sell securities.
You can use the fee only to figure gain or loss from the sale. See the
instructions for Schedule D (Form 1040), columns (d) and (e), for information on
how to report the fee.
taxmap/pub17/p17-152.htm#en_us_publink1000174114You can generally deduct hobby expenses, but only up to the amount
of hobby income. A hobby is not a business because it is not carried on to make
a profit. See
Activity not for profit in chapter 12 under
Other Income.
Pass-through entities include partnerships, S corporations, and
mutual funds that are not publicly offered. Deductions of pass-through entities
are passed through to the partners or shareholders. The partners or shareholders
can deduct their share of passed-through deductions for investment expenses as
miscellaneous itemized deductions subject to the 2% limit.
taxmap/pub17/p17-152.htm#en_us_publink1000174117You are a member of an investment club that is formed solely
to invest in securities. The club is treated as a partnership. The partnership's
income is solely from taxable dividends, interest, and gains from sales of
securities. In this case, you can deduct your share of the partnership's
operating expenses as miscellaneous itemized deductions subject to the 2% limit.
However, if the investment club partnership has investments that also produce
nontaxable income, you cannot deduct your share of the partnership's expenses
that produce the nontaxable income.
taxmap/pub17/p17-152.htm#en_us_publink1000174118Publicly offered mutual funds do not pass deductions for investment
expenses through to shareholders. A mutual fund is "publicly offered" if it is:
- Continuously offered pursuant to a public offering,
- Regularly traded on an established securities market, or
- Held by or for at least 500 persons at all times during the
tax year.
A publicly offered mutual fund will send you a Form 1099-DIV,
Dividends and Distributions, or a substitute form, showing the net amount of
dividend income (gross dividends minus investment expenses). This net figure is
the amount you report on your return as income. You cannot deduct investment
expenses.
taxmap/pub17/p17-152.htm#en_us_publink1000174119You should receive information returns from pass-through entities.
taxmap/pub17/p17-152.htm#en_us_publink1000174120These entities issue Schedule K-1, which lists the items and
amounts you must report and identifies the tax return schedules and lines to
use.
taxmap/pub17/p17-152.htm#en_us_publink1000174121These funds will send you a Form 1099-DIV, Dividends and Distributions
or a substitute form, showing your share of gross income and investment
expenses. You can claim the expenses only as a miscellaneous itemized deduction
subject to the 2% limit.
taxmap/pub17/p17-152.htm#en_us_publink1000174122You can deduct investment fees, custodial fees, trust administration
fees, and other expenses you paid for managing your investments that produce
taxable income.
taxmap/pub17/p17-152.htm#en_us_publink1000174123You can usually deduct legal expenses that you incur in attempting
to produce or collect taxable income or that you pay in connection with the
determination, collection, or refund of any tax.
You can also deduct legal expenses that are:
- Related to either doing or keeping your job, such as those
you paid to defend yourself against criminal charges arising out of your trade
or business,
- For tax advice related to a divorce, if the bill specifies
how much is for tax advice and it is determined in a reasonable way, or
- To collect taxable alimony.
You can deduct expenses of resolving tax issues relating to profit
or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E),
or farm income and expenses (Schedule F) on the appropriate schedule. You deduct
expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). See
Tax Preparation Fees, earlier.
For information on whether, and if so, how, you may deduct a
loss on your deposit in a qualified financial institution, see
Loss on Deposits in chapter 25.
If you had to repay an amount that you included in income in
an earlier year, you may be able to deduct the amount you repaid. If the amount
you had to repay was ordinary income of $3,000 or less, the deduction is subject
to the 2% limit. If it was more than $3,000, see
Repayments Under Claim of Right under
Deductions Not Subject to the 2% Limit,
later.
You can deduct safe deposit box rent if you use the box to store
taxable income-producing stocks, bonds, or investment-related papers and
documents. You cannot deduct the rent if you use the box only for jewelry, other
personal items, or tax-exempt securities.
taxmap/pub17/p17-152.htm#en_us_publink1000174132You can deduct service charges you pay as a subscriber in a dividend
reinvestment plan. These service charges include payments for:
- Holding shares acquired through a plan,
- Collecting and reinvesting cash dividends, and
- Keeping individual records and providing detailed statements
of accounts.
Trustee's administrative fees that are billed separately and
paid by you in connection with your individual retirement arrangement (IRA) are
deductible (if they are ordinary and necessary) as a miscellaneous itemized
deduction subject to the 2% limit. For more information about IRAs, see
chapter 17.
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