Tax DeductionsEmployee Business Expenses
Includes expenses for your job that you were not reimbursed for. These are deductible on Schedule A, but as an employee, you only get the amount in excess of 2% of your adjusted gross income, and only if you can itemize. For instance, if your AGI is $100,000, you must have at least $2000 in employee business expenses before you will begin to benefit from the deduction.
Books and Publications
- Books, trade journals, newspapers and publications for your trade or profession
Dues and Fees:
- Dues to a professional organization for people in your profession
- Union dues, initiation fees, and assessments for benefit payments to unemployed union members.
- Regulatory fees for your profession
- Dues to chambers of commerce and similar organizations if the membership helps you carry out your job duties (see exceptions).
- Licenses paid to state or local governments Education and Research
- Educational expenses related to your present job that maintains or improves your skills.
- Research expenses
Equipment and Supplies
- Depreciation of computer and other equipment if required for your job
- Supplies and tools you use in your job
- Expenses for an office in your home IF part of the home is used regularly
and exclusively for your
work, AND use of your home office is for the convenience of your employer
Job hunting expenses
- Resume preparation (drafting, typing, printing, mailing, faxing);
- Employment agency fees;
- Executive recruiters fees;
- Portfolio preparation costs;
- Career counseling to assist you in improving your position;
- Legal and accounting fees you pay in connection with employment contract negotiations and preparation;
- Transportation costs to job interviews;
- Long distance calls to prospective employers;
- Newspapers you purchase to read the employment ads;
- Other business publications you purchase to read the employment ads;
- Half of your meals you pay for that are directly related to your job search
- If you take a trip away from home to look for a new job, your expenses
for traveling, lodging, meals
(50% of the cost), etc. are deductible only if the primary purpose of your trip
is to look for a job. To
substantiate the purpose of your trip, keep a daily log of your interviews,
application efforts, etc.
Meals and Entertainment
To deduct job hunting expenses, you must be looking for a job in your present line of work (i.e., youre not changing professions or looking for your first job). Expenses include:
- Meals and Entertaining costs (only 50% of the cost is deductible). Keep a record of the date, place, people present, and business discussed. Telephone Charges
- Cost of business calls charged to home phone.
Travel and Transportation
- Traveling costs incurred while away from home on business for your employer
- Traveling costs paid in connection with a temporary work assignment
- Transportation between your home and a temporary work location if you have no regular place of work but you ordinarily work in the metropolitan area where you live and the temporary work location is outside that area
- Transportation between your home and a temporary work location if you have at least one regular workplace for this employment. It does not matter how far away the temporary location is in this case.
- Transportation from one job to another if you work two places in one
Uniforms and Gear
- Protective clothing and gear
- Uniforms (except if youre full-time active duty in the armed forces)
- Dry cleaning costs for your uniforms or protective clothing (not for your everyday clothing, though)
- Specialized clothing designed for your job, as long as theyre not suitable for everyday wear
- Safety equipment, such as hard hats, safety glasses, safety boots, and
- Gifts, but only up to $25 per recipient
- Passport for business travel
- Medical exams required by your employer
- Occupational taxes if theyre charged at a flat rate by your city or other local government for the privilege of working in that area
- Business liability insurance premiums
- Job dismissal insurance premiums
- Damages you pay to a former employer for a breach of employment contract
- Employee contributions to state disability funds
Self-Employed Business Expenses
- See Employee Business Expenses listed above for deductible expenses.
Other possible expenses include:
- Interest on business loans
Miscellaneous Schedule A Expenses
If you're self-employed, your expenses are deductible in full (but possibly subject to other limitations).
- Real estate expenses: Mortgage interest Mortgage prepayment penalties Penalties of early withdrawals Points on principal residence financing Real estate taxes
- Auto registration fees
- Charitable contributions (cash and non-cash) made to qualified U.S. charities.
- Investment expenses: Accounting fees (preparation of tax return) Brokerage fees Investment fees Legal fees Safe deposit box rental Interest on margin accounts
- Taxes Ad valorem tax Certain special assessments Condo or coop maintenance (property tax portion) Disability insurance tax (some states) Foreign taxes Income tax (state and local) Occupational taxes Personal property tax Real property tax State transfer tax Withholding taxes
- Casualty and theft Losses
Qualified Medical Expenses
- Air conditioner necessary for relief from allergies or other respiratory problems
- Alcoholism treatment
- Artificial limbs
- Artificial teeth
- Birth control pills prescribed by a doctor
- Braille books and magazines used by a visually-impaired person
- A clarinet and lessons to treat the improper alignment of a childs upper and lower teeth
- Contact lenses
- Cosmetic surgery to improve a deformity
- Dental fees and supplies
- Diet, special. When prescribed by a doctor, you can deduct the extra cost of purchasing special food to alleviate a specific medical condition.
- Doctor or physician expenses
- Drug addiction treatment
- Elastic hosiery to treat blood circulation problems
- Exercise program if recommended by doctor to treat a specific condition
- Extra rent/utilities for a larger apartment required in order to provide space for a nurse/attendant
- Eye surgery, when it is not for cosmetic purposes only
- Guide dog
- Hospital care
- Household help for nursing care services only
- Insurance premiums for medical care coverage
- Laboratory fees
- Lead-based paint removal where a child has or had lead poisoning
- Legal fees paid to authorize treatment for mental illness
- Lifetime care advance payments
- Lodging expenses while away from home to receive medical care in a hospital or medical facility
- Long-term care insurance and long term care expenses (with limitations)
- Mattresses and boards bought specifically to alleviate an arthritic condition
- Medical aids. This includes wheelchairs, hearing aids and batteries, eyeglasses, contact lenses, crutches, braces, and guide dogs (including costs paid for their care).
- Medical conference admission costs and travel expenses for a chronically ill person or a parent of a chronically ill child to learn about new medical treatments.
- Medicines and prescription drugs
- Nursing care.
- Nursing home expenses if the there to obtain medical care.
- Oxygen and oxygen equipment.
- Reclining chair bought on a doctors advice by a person with a cardiac condition.
- Special education tuition of mentally impaired or physically disabled person.
- Smoking cessation programs.
- Swimming costs, if therapeutic and prescribed by a physician.
- Telephone cost, repair and equipment for a hearing-impaired person.
- Television equipment to display the audio part of a TV program for hearing-impaired persons.
- Transplants of an organ, but not hair transplants.
- Transportation costs for obtaining medical care.
- Travel expenses for parents visiting their child in a special school for children with drug problems, where the visits are part of the medical treatment.
- Weight loss program, if it is recommended by a doctor to treat a specific medical condition or to cure any specific ailment or disease
- Whirlpool baths prescribed by a doctor.
- Wig for the mental health of a patient who lost his or her hair due to a disease.
- X-ray services.
Expenses You Cannot Deduct
Generally, you can only deduct the excess over 7.5% of Adjusted Gross Income, and then only if you can itemize on Schedule A.
This means that if you make $100,000, you can only deduct the amount of medical expenses you spent over $7,500.
People commonly hope to deduct some of the following expenses, but unfortunately they are not deductible.
- Clothing that is adaptable to everyday wear (this includes suits, evening wear, etc.).
- Commuting costs (subways and rail fares, tolls, gasoline, and parking).
- Dues to country clubs, golf and athletic clubs, and airline and hotel clubs.
- Home phone line
- Job hunting expenses if youre looking for your first job, or changing professions.
- Dry cleaning and laundry (unless youre on a business trip)
- Legal fees and closing costs involved in purchasing a property
- Fees for taking an exam to qualify you in a profession (e.g., Bar Exam, GRE, etc.)
- Immigration visa expenses, such as for obtaining a Green Card or H-1B visa.
- Moving expenses that were not associated with your job and were less than 50 miles.
- Interest on personal loans.
- Support of family members, unless they qualify as your dependents.
- Lunch on the job.
- Undergraduate tuition and fees (must take Lifetime Learning or Hope Credit)
- Education that does not maintain or improve skills in established job.
- Personal vacations.
- Cosmetic surgery to improve personal appearance
- Contributions made to individuals or foreign charities.
- Expenses that were reimbursed by your employer.
- Student loan interest if adjusted gross income is greater than $55,000.
- Student loan principal.