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What is allowed as Miscellaneous Deductions?

You are generally entitled to deduct expenses incurred in connection with your investment activity or in the production of income. These costs are deductible on Schedule A as a Miscellaneous Itemized Deduction, subject to the 2% of AGI limitation, and include:

  • Income tax preparation assistance, including professional fees, tax preparation software or books, electronic filing fees, the additional time used on America Online to ask questions about your taxes.
    Note: If your tax return contains a business schedule, such as Schedule C, E or F, a reasonable allocation of part of the tax preparation expenses to those activities may reduce your taxable income!
  • Trustee fees paid for an IRA, SEP or KEOGH account in your name, providing you actually paid the fee and did not simply have it withdrawn from those sheltered funds.
  • Safe deposit rent, *if* the box is used to safeguard income producing property or investments. If you use the box solely to store personal papers, jewelry, or other personal items, you have no deduction.
  • Legal instructions related to investments, taxes, your employment or production of income. (Does NOT include fees for divorce, preparing wills, estate planning, criminal or civil defenses and other matters, except to the extent that they are allocated to the deductible uses mentioned previously.)
  • Hobby expenses, but only up to the amount of income from your hobby that you have included in income.
  • Investment advice, publications, fees and other expenses, but NOT travel or seminars connected with a current or potential investment. For example, you may not deduct the cost of travel to attend shareholder meetings.
    Note: Investment expenses are only deductible to the extent they apply to investments that would produce taxable income. Therefore, if your portfolio generates income that is 40% from municipal (tax free) sources, your deduction is limited to 60% of the applicable fees or expenses.

Specifically NOT deductible: Adoption expenses, burial/funeral expenses, campaign contributions, license fees (unless business related), health spa memberships, home repairs and improvements, life or disability insurance premiums, bank fees.



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We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

Copyright 2017 Wink Tax Services / Wink Inc.
Last modified: January 30, 2017