Thursday, January 11, 2007



*There are numerous “Miscellaneous” deductions, but, in most cases, they are of no value in reducing your taxes since you must subtract 2% of your adjusted gross income from the total of these items and can only deduct the remaining balance – if any.
Qualifying business meals and entertainment expenses you incur as an employee are includible as “Miscellaneous” deductions, but must first be reduced by the 50% (or 75%) limit on meals and entertainment expenses.

There are three categories of deductions subject to the 2% Limit:
1. Unreimbursed employee business expense (Line 20 of Schedule A).
2. Tax Preparation Fees (Line 21 of Schedule A)
3. Other Expenses.
For a list of Other such Expenses,CLICK HERE

There are some Miscellaneous deductions NOT subject to the 2% reduction. They go on line 27 of Schedule A. They include:
1. amortizable premium on taxable bonds
2. Casualty and theft losses from income producing property
3. Gambling losses up to the amount of gambling winnings
4. Impairment-related work expenses for disabled persons
5. Losses passed thru from Schedule K-1, Form 1065-B, box 2
6. Repayments of more than $ 3000 under a claim of right
7. Unrecovered investment in an annuity.

The most frequently encountered of these deductions NOT subject to the 2% limit is on returns for people who go to gambling casinos and have some winnings. Usually people who win substantially, also have even more substantial losses. They have to pay tax on the winnings, and may be forced to itemize to claim the losses when, otherwise, they might have been better off taking the standard deduction.

For LINKS and Other IRS Resources,
Click Here


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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.


Anonymous said...

Thanks for posting this info. I guess my question is "are investment management fees paid out of pocket to a money manager on an IRA or Rax Deferred account (401-k, var. Annuity, etc) deductible. These tax deferred accounts are not producing taxable income NOW, but will eventually. I am wondering if the fees paid to an investment manager on a tax deferred account can be deducted now. Thanks again for the help.

taxxcpa said...

The fees you pay, whether to an investment manager or to a broker, is deducible. Even if it is deducted from your IRA it is ultimately deducted since your IRA is reduced by the fee--so the taxable withdrawal will be reduced.

Paying an Advisor or other cost to maintain or manage an IRA or any other investments other than tax-exempt bonds or funds is deductible.

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