Miscellaneous and job-related deductions allow taxpayers to deduct many expenses relating to job searches, employee expenses, and investment expenses. However, most of these deductions must be itemized and are limited to that amount that exceeds 2% of the adjusted gross income (AGI) of the taxpayer — what is commonly referred to as the 2% AGI floor. Adjusted gross income is gross income minus certain adjustments, such as retirement contributions and deductible alimony.
If a miscellaneous expense is subject to the 2% AGI floor, then all such expenses must exceed 2% of the taxpayer's adjusted gross income, and only that portion is deductible.
Most of the miscellaneous expenses subject to the 2% AGI floor are those that can be claimed by jobseekers, employees, or investors, or they are personal expenses that would otherwise not be deductible, and includes such things as:
• unreimbursed travel, meals, entertainment expenses
• unreimbursed local transportation costs
• professional, business association, and union dues
• cost of uniforms and work clothes, including the cost of their cleaning, laundry, and repair
• cost of job searches and job agency fees
• employee home-office expenses
• small tools
• subscriptions to professional journals
• electronic gadgets, such as mobile phones and tablets, and any associated telecommunication expenses
• work-related educational costs
• tax advice and preparation fees
• convenience fees charged for using a credit card to pay taxes
• appraisal fees for casualty losses and charitable contributions
• investment costs, including IRA custodial fees, investment advice, investment counselor fees, and safe-deposit rentals.
Travel costs that are generally not deductible include trips to investigate rental property and trips to conventions, seminars, or other types of meetings, including trips to attend stockholders meetings. Commuting to and from work is never deductible. The cost of traveling to investigate income-producing property or to confer with an attorney, accountant, trustee, or investment counselor about income is deductible but subject to the 2% AGI floor.
The cost of uniforms and work clothes, including the cost for cleaning, laundering, and repairing the clothes, are deductible if they are not suitable to wear elsewhere. However, if the clothes are suitable for wearing off the job, then they are not deductible, even if they are required for the job. So, for instance, television newscasters cannot deduct the cost of their clothing, since they can wear those clothes anywhere.
Computers purchased for work are deductible if it is for the convenience of the employer, and the employer requires it. The work done on the computer must be inextricably linked to the job. Depreciation claimed for computers used to manage investments are also subject to the 2% floor.
Cell phones are also deductible. Previous to 2010, cell phones were classified as listed property. However, the Small Business Jobs Act of 2010 removed cell phones from this list and the strict requirements for documenting the use of listed property.
Generally, the cost of preparing tax returns and audits is subject to the 2% AGI floor. Most of the fees that are deductible must be directly related to preparing a tax return or for help over a specific tax controversy.