Bill Bischoff for MarketWatch writes: The first thing to know about miscellaneous itemized deductions is that if they’re small, you probably won’t benefit from them. If all you have in your miscellaneous category is a random work-related magazine subscription, forget about it. The only way you’re allowed to deduct miscellaneous items is if they total more than 2% of your adjusted gross income (AGI). You can then deduct anything in excess of that 2%. Just so you know, AGI is the number from the bottom of page 1 of your Form 1040. It includes all your taxable income items and is reduced by certain deductions claimed on page 1, such as deductible IRA contributions, alimony paid to an ex-spouse, and moving expenses.
For example, say your AGI is $50,000. Two percent of that is $1,000. So your total miscellaneous itemized deductions must exceed $1,000 in order for you to claim a penny. But if you have miscellaneous expenses of $1,500, you’ll only get to deduct $500, or $1,500 minus $1,000.
Next comes the somewhat inexact science of defining what qualifies for a miscellaneous deduction. These include business expenses that you’re not reimbursed for, such as dues paid to a union or other professional society, uniforms if they’re not appropriate for wear outside of the workplace, courses you take to improve your job skills (but not to get you a job in a new field), and the expense of looking for a new job. Other examples of miscellaneous expenses include some home-office deductions, investment and legal fees if they helped you produce taxable income and the expense of hiring an accountant to help you master your 1040.
If you’re close to meeting the 2% floor one year, try bunching some of next year’s expenses into that year. For example, rather than wait until January to enroll in that continuing education class, pay your tuition in December. That way, maybe you can get some tax savings from your miscellaneous deductions at least every other year.
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