You can deduct the items listed below as miscellaneous itemized
deductions. They are not subject to the 2% limit. Report these items
on line 27, Schedule A (Form 1040).
List of Deductions
- Amortizable premium on taxable bonds.
- Casualty and theft losses from income-producing
- Federal estate tax on income in respect of a decedent.
- Gambling losses up to the amount of gambling winnings.
- Impairment-related work expenses of persons with
- Repayments of more than $3,000 under a claim of right.
- Unrecovered investment in an annuity.
on Taxable Bonds
In general, if the amount you pay for a bond is greater than its
stated principal amount, the excess is bond premium. You can elect to
amortize the premium on taxable bonds. The amortization of the premium
is generally an offset to interest income on the bond rather than a
separate deduction item.
Pre-1998 election to amortize bond premium.
Generally, if you first elected to amortize bond premium before
1998, the above treatment of the premium does not apply to bonds you
acquired before 1988.
Bonds acquired before October 23, 1986.
The amortization of the premium on these bonds is a miscellaneous
itemized deduction not subject to the 2% limit.
Bonds acquired after October 22, 1986, and before 1988.
The amortization of the premium on these bonds is investment
interest expense subject to the investment interest limit, unless you
chose to treat it as an offset to interest income on the bond.
Deduction for excess premium.
On certain bonds (such as bonds that pay a variable rate of
interest or that provide for an interest-free period), the amount of
bond premium allocable to a period may exceed the amount of stated
interest allocable to the period. If this occurs, treat the excess as
a miscellaneous itemized deduction that is not subject to the 2%
limit. However, the amount deductible is limited to the amount by
which your total interest inclusions on the bond in prior periods
exceed the total amount you treated as a bond premium deduction on the
bond in prior periods. If any of the excess bond premium cannot be
deducted because of the limit, this amount is carried forward to the
next period and is treated as bond premium allocable to that period.
Pre-1998 choice to amortize bond premium. If you made
the choice to amortize the premium on taxable bonds before 1998, you
can deduct the bond premium amortization that is more than your
interest income only for bonds acquired during 1998 and later years.
For more information on bond premium, see Bond Premium
Amortization in chapter 3 of Publication 550.
Certain Casualty and Theft Losses
You can deduct a casualty or theft loss as a miscellaneous itemized
deduction not subject to the 2% limit if the damaged or stolen
property was income-producing property (property held for investment,
such as stocks, notes, bonds, gold, silver, vacant lots, and works of
art). First report the loss in Section B of Form 4684. You may also
have to include the loss on Form 4797 if you are otherwise required to
file that form. Your deduction is the amount of the loss included on
lines 32 and 38b of Form 4684 and line 18b of Form 4797. For more
information on casualty and theft losses, see Publication 547.
Federal Estate Tax on Income
in Respect of a Decedent
You can deduct the federal estate tax attributable to income in
respect of a decedent that you as a beneficiary include in your gross
income. Income in respect of the decedent is gross income that the
decedent would have received had death not occurred and that was not
properly includible in the decedent's final income tax return. Get
for information about figuring the amount of this
Gambling Losses Up to the
Amount of Gambling Winnings
You must report the full amount of your gambling winnings for the
year on line 21, Form 1040. You deduct your gambling losses for the
year on line 27, Schedule A (Form 1040). You cannot deduct gambling
losses that are more than your winnings.
You cannot reduce your gambling winnings by your gambling losses
and report the difference. You must report the full amount of your
winnings as income and claim your losses (up to the amount of
winnings) as an itemized deduction. Therefore, your records should
show your winnings separately from your losses.
Diary of winnings and losses. You must keep an accurate
diary or similar record of your losses and winnings.
Your diary should contain at least the following information.
- The date and type of your specific wager or wagering
- The name and address or location of the gambling
- The names of other persons present with you at the gambling
- The amount(s) you won or lost.
Proof of winnings and losses.
In addition to your diary, you should also have other
documentation. You can generally prove your winnings and losses
through Form W-2G, Certain Gambling Winnings, Form
5754, Statement by Person(s) Receiving Gambling Winnings,
wagering tickets, canceled checks, credit records, bank
withdrawals, and statements of actual winnings or payment slips
provided to you by the gambling establishment.
For specific wagering transactions, you can use the following items
to support your winnings and losses.
- Keno: Copies of the keno tickets you purchased
that were validated by the gambling establishment, copies of your
casino credit records, and copies of your casino check cashing
- Slot machines: A record of the machine number and
all winnings by date and time the machine was played.
- Table games (twentyone, blackjack, craps, poker,
baccarat, roulette, wheel of fortune, etc.): The number of the
table at which you were playing. Casino credit card data indicating
whether the credit was issued in the pit or at the cashier's
- Bingo: A record of the number of games played,
cost of tickets purchased, and amounts collected on winning tickets.
Supplemental records include any receipts from the casino, parlor,
- Racing (horse, harness, dog, etc.): A record of
the races, amounts of wagers, amounts collected on winning tickets,
and amounts lost on losing tickets. Supplemental records include
unredeemed tickets and payment records from the racetrack.
- Lotteries: A record of ticket purchases, dates,
winnings, and losses. Supplemental records include unredeemed tickets,
payment slips, and winnings statements.
These recordkeeping suggestions are intended as general guidelines
to help you establish your winnings and losses. They are not
all-inclusive. Your tax liability depends on your particular facts and
Impairment-Related Work Expenses
If you have a physical or mental disability that limits your being
employed, or substantially limits one or more of your major life
activities, such as performing manual tasks, walking, speaking,
breathing, learning, and working, you can deduct your
impairment-related work expenses.
Impairment-related work expenses are ordinary and necessary
business expenses for attendant care services at your place of work
and other expenses in connection with your place of work that are
necessary for you to be able to work.
Where to report.
If you are an employee, you enter impairment-related work expenses
on Form 2106 or 2106-EZ. Enter on line 27, Schedule A (Form
1040) that part of the amount on line 10 of Form 2106, or line 6 of
Form 2106-EZ, that is related to your impairment. Enter the
amount that is unrelated to your impairment on line 20, Schedule A
Repayments Under Claim of Right
If you had to repay more than $3,000 that you included in your
income in an earlier year because at the time you thought you had an
unrestricted right to it, you may be able to deduct the amount you
repaid, or take a credit against your tax. See Repayments
in Publication 525
for more information.
Unrecovered Investment in Annuity
A retiree who contributed to the cost of an annuity can exclude
from income a part of each payment received as a tax-free return of
the retiree's investment. If the retiree dies before the entire
investment is recovered tax free, any unrecovered investment can be
deducted on the retiree's final income tax return. Get Publication 575,
Pension and Annuity Income, for more information about
the tax treatment of pensions and annuities.
If you are a qualified performing artist, you can deduct your
employee business expenses as an adjustment to income rather than as a
miscellaneous itemized deduction. To qualify, you must meet all three
of the following requirements.
- You perform services in the performing arts for at least two
employers during your tax year. (You are considered to have performed
services in the performing arts for an employer only if that employer
paid you $200 or more.)
- Your allowable business expenses related to the performing
arts are more than 10% of your gross income from the performing
- Your adjusted gross income is not more than $16,000 before
deducting these business expenses.
If you do not meet all of the above requirements, you must deduct
your expenses as a miscellaneous itemized deduction subject to the 2%
Special rules for married persons.
If you are married, you must file a joint return unless you lived
apart from your spouse at all times during the tax year.
If you file a joint return, you must figure requirements (1) and
(2) above separately for both you and your spouse. However,
requirement (3) applies to your and your spouse's combined adjusted
Where to report.
If you meet all of the above requirements, you should first
complete Form 2106 or Form 2106-EZ. Then you include your
performing-arts related expenses from line 10 of Form 2106 or from
line 6 of Form 2106-EZ on line 32 of Form 1040. Then write
"QPA" and the amount of your performing-arts related expenses on
the dotted line next to line 32 (Form 1040).
Officials Paid on a Fee Basis
If you are a fee-basis official, you can claim your expenses in
performing services in that job as an adjustment to income rather than
as a miscellaneous itemized deduction. To qualify as a fee-basis
official, you must be employed by a state or local government and be
paid in whole or in part on a fee basis.
Where to report.
If you qualify as a fee-basis official, you should first complete
Form 2106 or Form 2106-EZ. Then include your expenses in
performing services in that job ( line 10 of Form 2106 or line 6 of
Form 2106-EZ) on line 32 of Form 1040. Then write "FBO"
and the amount of those expenses on the dotted line next to line 32