Miscellaneous Itemized Deductions Explained & Examples
The Tax Cuts and Jobs Act of 2017 brought about several significant changes to deductions taxpayers can claim for tax years between 31 December 2017, and January 1, 2026. Indeed, most of the miscellaneous itemized deductions that you may previously have claimed are not applicable within that time frame.
Previously claimable expenses like union dues, hobby expenses, and investment fees are not currently valid tax deductions. However, learning about miscellaneous itemized deductions is still important for helping taxpayers file back taxes accurately and to help you make sure that you only claim eligible deductions for each filing period.
What Are Itemized Deductions and What Is Their Purpose?
Itemized deductions are "below-the-line" deductions that offer an alternative to the standard deduction. Itemized deductions are subtracted from the taxpayer's adjusted gross income (AGI) to reach his or her taxable income. Taxpayers can choose between taking the standard deduction amount and itemizing their deductions.
Tax planning professionals can help you determine whether opting for itemized deductions or the standard deduction would result in a larger return. They can also explain how above-the-line vs below-the-line deductions work and how taking a deduction above or below the line may impact your ability to qualify for certain benefits.
What Are the Most Common Itemized Deductions?
The Internal Revenue Service (IRS) allows taxpayers to deduct expenses such as:
Dental or medical expenses that exceed 7.5% of their AGI
State and local taxes paid (limits apply)
Interest on a home mortgage (limits apply)
Charity donations (limits apply)
Losses from casualties or theft in federally declared disaster areas
Some miscellaneous deductions
What Are Miscellaneous Itemized Deductions?
Miscellaneous itemized deductions are deductions that don't fit into any of the other categories specified in the tax code. You can no longer claim most of these deductions. As one example, you can no longer claim deductions for unreimbursed employee expenses unless you belong to one of the following categories: Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses (see Form 2106).
Most miscellaneous itemized deductions could only be claimed if they exceeded 2% of your AGI. You can still claim some expenses as itemized deductions using Schedule A (Form 1040) or 1040-SR.
Examples of Miscellaneous Itemized Deductions
Miscellaneous deductions are explained in detail in IRS Publication 529. These deductions fall into two categories:
1. Deductions Subject to the 2% Rule
These deductions allowed taxpayers to deduct expenses that exceeded 2% of their Adjusted Gross Income (AGI). These include:
Unreimbursed employee expenses (including but not limited to):
Business liability insurance premiums
Depreciation of a cell phone or computer used at work
Professional society dues
Educator expenses
Home office expenses
Legal fees when related to your job
Licenses and regulatory fees
Occupational taxes
Please note that these deductions are not currently available for employees who don’t fit into one of the aforementioned categories.
Tax Preparation Fees:
For tax years prior to 2018, taxpayers could deduct expenses incurred while preparing their tax returns, including software and filing charges.
Other Previously Eligible Expenses:
Appraisal fees for a casualty loss or charitable contribution
Office rent connected with investments
Investment fees and expenses
Legal fees related to generating taxable income
Loss on traditional or Roth IRAs
Repayments of Social Security benefits if the figure is less than $3,000
State and local taxes with no cap
Tax advice fees
2. Deductions Not Subject to the 2% Limit
The following miscellaneous tax deductions are not subject to the 2% limit and can still be claimed as itemized deductions:
Amortizable premium on taxable bonds
Casualty and theft losses from income-producing property
Federal estate tax on income in respect of a decedent
Impairment-related work expenses for people with disabilities
Repayments of more than $3,000 under a claim of right
Unrecovered investment in an annuity
Key Changes to Miscellaneous Itemized Deductions Under the Tax Cuts and Jobs Act
Some of the most significant changes brought about under theTax Cuts and Jobs Act are:
Higher Standard Deduction
The TCJA raised taxpayers' standard deduction limit. Single filers can claim up to $13,850 for the 2023 tax year and $14,600 for the 2024 tax year. This rises to $27,700 and $29,200 for married couples filing jointly in the 2023 and 2024 tax years, respectively.
For most filers, the new standard deduction will exceed the combined total of all your itemized deductions, even when you deduct mortgage interest.
Take a closer look at Schedule A to discover how itemized deductions changed with the TCJA.
Commuter Tax Benefits
The TJCA suspended the right to claim $20 a month or $240 annually tax-free for bicycle commuting expenses. Employer deductions for qualified transportation fringe (QTF) expenses such as parking and carpooling were also suspended.
Moving Expenses Deduction
The costs related to relocating because of a new job were deductible as an above-the-line deduction on Form 1040. This was then subtracted from your gross income to calculate your AGI. Moving costs are no longer deductible.
Alimony Deduction
The partner making alimony payments received an above-the-line deduction while the partner receiving the alimony payment was required to count the money as taxable income for separation and divorce agreements made on or before 31 December 2018.
For separation and divorce agreements made or modified after that date, the paying partner cannot deduct alimony payments and the receiving partner does not need to include them in his or her taxable income.
Please note that child support payments are non-deductible for the paying spouse and tax-free for the recipient.
SALT Taxes Deduction
The deduction for state and local taxes (SALT taxes) via Schedule A used to be unlimited. SALT taxes include state income taxes, real estate taxes, and personal property taxes. These deductions are now limited to $10,000 or $5,000 if married and filing separately.
Stay Up-To-Date on Tax Laws With a Tax Professional
The U.S. tax code is a constantly evolving labyrinth and it’s hard to stay up to date with every change that could affect your tax return. This is a problem for many small business owners who wish to stay compliant and take advantage of all the benefits available to them.
Knowing about changes to miscellaneous itemized deductions as well as other annual changes to the tax code can be especially challenging for taxpayers who lead hectic lives. Work with a tax professional to stay abreast of all the relevant changes and use them to your advantage.
