If you haven’t filed your taxes yet, you still have a little time–tax returns are due on April 17, 2018. As you get together all your tax records, it’s worth your time to see if you qualify to deduct occupational expenses. Read on to find out more!
What Is an Occupational Deduction?
An occupational deduction is the deduction of an expense incurred in your specific line of work. The IRS allows you to deduct the cost of “ordinary and necessary” expenses related to your job. Typically, occupational deductions include things like:
- Memberships and dues to professional organizations
- Necessary business travel
- Continuing education
- Legal fees related to performing or maintaining your job
This is not a definitive list and there are different rules for different types of work. Make sure you consult with a tax professional before you start logging any expenses on your tax return!
How Do I Deduct Occupational Expenses?
In order to take occupational deductions you first have to itemize your deductions overall. You should only do this if your total itemized deductions are greater than the standard deduction.
In addition, you have to take into account the “2% floor” when it comes to occupational deductions. You can only deduct occupational expenses if the total amount you deduct is over 2% of your adjusted gross income (AGI). In addition, only the amount that is over the 2% of your AGI can be deducted.
Long story short: deducting work-related expenses is not for everyone. You should only take occupational deductions if you incur significant expenses while performing your job and if it’s in your best interest to itemize your deductions rather than take the standard deduction.
For assistance determining which path is right for you, call the team at Taxation Solutions, Inc. Our experts are on hand to advise you and help with all of your tax preparation needs. We look forward to hearing from you!