||2008 Tax Year
Limit on itemized deductions. The amount of adjusted gross income allowed without limiting your itemized deductions has increased. For 2008, if your adjusted
gross income is more than $159,950 ($79,975 if you are married filing separately), you may have to reduce the amount of certain
itemized deductions, including most miscellaneous deductions. For more information and a worksheet, see the instructions for
Schedule A (Form 1040), line 29, or chapter 29.
Standard mileage rate. The 2008 rate for business use of a vehicle is 50½ cents per mile (58½ cents per mile after June 30, 2008).
This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). You must
reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. This chapter covers the following
Deductions subject to the 2% limit.
Deductions not subject to the 2% limit.
Expenses you cannot deduct.
You must keep records to verify your deductions. You should keep receipts, canceled checks, substitute checks, financial account
statements, and other documentary evidence. For more information on recordkeeping, get Publication 552, Recordkeeping for
Useful Items - You may want to see:
Travel, Entertainment, Gift, and Car Expenses
Business Use of Your Home (Including Use by Daycare Providers)
How To Depreciate Property
Form (and Instructions)
Schedule A (Form 1040)
Employee Business Expenses
Unreimbursed Employee Business Expenses
Deductions Subject to the 2% Limit
You can deduct certain expenses as miscellaneous itemized deductions on Schedule A
(Form 1040). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You figure your deduction
on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross
income is the amount on Form 1040, line 38.
Generally, you apply the 2% limit after you apply any other deduction limit. For example, you apply the 50% (or 80%) limit
on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit.
Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040).
Unreimbursed employee expenses (line 21).
Tax preparation fees (line 22).
Other expenses (line 23).
Unreimbursed Employee Expenses (Line 21)
Generally, the following expenses are deductible on Schedule A (Form 1040), line 21.
You can deduct only unreimbursed employee expenses that are:
Paid or incurred during your tax year,
For carrying on your trade or business of being an employee, and
Ordinary and necessary.
An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it
is appropriate and helpful to your business. An expense does not have to be required to be considered necessary.
Examples of unreimbursed employee expenses are listed next. The list is followed by discussions of additional unreimbursed
Business bad debt of an employee.
Education that is work related. (See chapter 27.)
Legal fees related to your job.
Licenses and regulatory fees.
Malpractice insurance premiums.
Medical examinations required by an employer.
Passport for a business trip.
Subscriptions to professional journals and trade magazines related to your work.
Travel, transportation, entertainment, and gifts related to your work. (See chapter 26.)
Business Liability Insurance
You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job.
Damages for Breach of Employment Contract
If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay
you received from that employer.
Depreciation on Computers or Cell Phones
You can claim a depreciation deduction for a computer or cell phone that you use in your work as an employee if its use is:
For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer or
cell phone, see Publication 529.
Dues to Chambers of Commerce and Professional Societies
You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and
to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. Similar organizations
Lobbying and political activities.
You may not be able to deduct that part of your dues that is for certain lobbying and political activities. See
Dues used for lobbying
under Lobbying Expenses,
Educator Expenses over Limit
If you were an eligible educator in 2008, and you had qualified educator expenses that you cannot take as an adjustment to
gross income, you can deduct the rest of those expenses that are ordinary and necessary as an itemized deduction subject to
the 2% limit. For information on educator expenses that you can take as an adjustment to gross income, see chapter 26.
If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating
expenses and depreciation of your home.
You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly
As your principal place of business for any trade or business,
As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or
In the case of a separate structure not attached to your home, in connection with your trade or business.
The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in
your job. Get Publication 587 for more detailed information and a worksheet.
You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new
job. You cannot deduct these expenses if:
You are looking for a job in a new occupation,
There was a substantial break between the ending of your last job and your looking for a new one, or
You are looking for a job for the first time.
Employment and outplacement agency fees.
You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation.
Employer pays you back.
If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive
in your gross income up to the amount of your tax benefit in the earlier year. (See
in chapter 12.)
Employer pays the employment agency.
If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not
include them in your gross income.
You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are
looking for a new job in your present occupation.
Travel and transportation expenses.
If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct
travel expenses to and from the area. You can deduct the travel expenses if the trip is primarily to look for a new job. The
amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in
determining whether the trip is primarily personal or is primarily to look for a new job.
Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new
job in your present occupation while in the area.
You can choose to use the standard mileage rate to figure your car expenses. The 2008 rate for business use of a vehicle
is 50½ cents per mile (58½ cents per mile after June 30, 2008). See chapter 26
for more information.
Licenses and Regulatory Fees
You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade,
business, or profession.
You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business
in the locality. If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the
2% limit; you cannot claim them as a deduction for taxes elsewhere on your return.
Repayment of Income Aid Payment
An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. If you repay
a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment.
Research Expenses of a College Professor
If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing
and publishing on subjects that relate directly to your teaching duties. You must have undertaken the research as a means
of carrying out the duties expected of a professor and without expectation of profit apart from salary. However, you cannot
deduct the cost of travel as a form of education.
Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1
year from the date of purchase. You can depreciate the cost of tools that have a useful life substantially beyond the tax
year. For more information about depreciation, see Publication 946.
You can deduct dues and initiation fees you pay for union membership.
You can also deduct assessments for benefit payments to unemployed union members. However, you cannot deduct the part of the assessments or contributions
that provides funds for the payment of sick, accident, or death benefits. Also, you cannot deduct contributions to a pension
fund, even if the union requires you to make the contributions.
You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities.
under Nondeductible Expenses, later.
Work Clothes and Uniforms
You can deduct the cost and upkeep of work clothes if the following two requirements are met.
It is not enough that you wear distinctive clothing. The clothing must be specifically required by your employer. Nor is it
enough that you do not, in fact, wear your work clothes away from work. The clothing must not be suitable for taking the place
of your regular clothing.
Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health
care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus,
Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear.
However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes,
which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform.
Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible.
You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses,
hard hats, and work gloves.
Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians,
fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers.
You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. However,
if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict
you from wearing it except while on duty as a reservist. In figuring the deduction, you must reduce the cost by any nontaxable
allowance you receive for these expenses.
If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount
by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive.
You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school.
Tax Preparation Fees (Line 22)
You can usually deduct tax preparation fees in the year you pay them. Thus, on your 2008 return, you can deduct fees paid
in 2008 for preparing your 2007 return. These fees include the cost of tax preparation software programs and tax publications.
They also include any fee you paid for electronic filing of your return. However, if you paid your tax by credit card, you
cannot deduct the convenience fee you were charged.
You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. On Schedule A (Form 1040),
line 23, you can deduct expenses you pay:
To produce or collect income that must be included in your gross income,
To manage, conserve, or maintain property held for producing such income, or
To determine, contest, pay, or claim a refund of any tax.
You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these
purposes. Some of these other expenses are explained in the following discussions.
If the expenses you pay produce income that is only partially taxable, see
Tax-Exempt Income Expenses,
later, under Nondeductible Expenses.
You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property.
Certain Casualty and Theft Losses
You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged
or stolen property in performing services as an employee. First report the loss in Section B of Form 4684, Casualties and
Thefts. You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file
that form. To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines
32 and 38b, or Form 4797, line 18a. For other casualty and theft losses, see chapter 25.
Clerical Help and Office Rent
You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting
the taxable income on them.
Depreciation on Home Computer
You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments
that produce taxable income). You generally must depreciate the computer using the straight line method over the Alternative
Depreciation System (ADS) recovery period. But if you work as an employee and also use the computer in that work, see Publication
Excess Deductions of an Estate
If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding
to the estate's property can deduct the excess. Do not include deductions for the estate's personal exemption and charitable
contributions when figuring the estate's total deductions. The beneficiaries can claim the deduction only for the tax year
in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. For
more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators.
Fees to Collect Interest and Dividends
You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends
on shares of stock. But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. You
must add the fee to the cost of the property.
You cannot deduct the fee you pay to a broker to sell securities. You can use the fee only to figure gain or loss from the
sale. See the instructions for Schedule D (Form 1040), columns (d) and (e), for information on how to report the fee.
You can generally deduct hobby expenses, but only up to the amount of hobby income. A hobby is not a business because it is
not carried on to make a profit. See
Activity not for profit
in chapter 12 under Other Income.
Indirect Deductions of Pass-Through Entities
Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Deductions of
pass-through entities are passed through to the partners or shareholders. The partners or shareholders can deduct their share
of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit.
You are a member of an investment club that is formed solely to invest in securities. The club is treated as a partnership.
The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. In this case, you
can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit.
However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share
of the partnership's expenses that produce the nontaxable income.
Publicly offered mutual funds.
Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. A mutual fund
is “publicly offered
” if it is:
Continuously offered pursuant to a public offering,
Regularly traded on an established securities market, or
Held by or for at least 500 persons at all times during the tax year.
A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing
the net amount of dividend income (gross dividends minus investment expenses). This net figure is the amount you report on
your return as income. You cannot deduct investment expenses.
You should receive information returns from pass-through entities.
Partnerships and S corporations.
These entities issue Schedule K-1, which lists the items and amounts you must report and identifies the tax return
schedules and lines to use.
Nonpublicly offered mutual funds.
These funds will send you a Form 1099-DIV, or a substitute form, showing your share of gross income and investment
expenses. You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit.
Investment Fees and Expenses
You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments
that produce taxable income.
You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in
connection with the determination, collection, or refund of any tax.
You can also deduct legal expenses that are:
Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out
of your trade or business,
For tax advice related to a divorce, if the bill specifies how much is for tax advice and it is determined in a reasonable
To collect taxable alimony.
You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or
royalties (Schedule E), or farm income and expenses (Schedule F) on the appropriate schedule. You deduct expenses of resolving
nonbusiness tax issues on Schedule A (Form 1040). See
Tax Preparation Fees
For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see
Loss on Deposits
in chapter 25.
If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid.
If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. If it was
more than $3,000, see
Repayments Under Claim of Right
under Deductions Not Subject to the 2% Limit, later.
Repayments of Social Security Benefits
For information on how to deduct your repayments of certain social security benefits, see
Repayments More Than Gross Benefits
in chapter 11.
You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related
papers and documents. You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt
Service Charges on Dividend Reinvestment Plans
You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. These service charges include payments
Holding shares acquired through a plan,
Collecting and reinvesting cash dividends, and
Keeping individual records and providing detailed statements of accounts.
Trustee's Administrative Fees for IRA
Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement
(IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. For
more information about IRAs, see chapter 17.
Deductions Not Subject to the 2% Limit
You can deduct the items listed below as miscellaneous itemized deductions. They are not subject to the 2% limit. Report these
items on Schedule A (Form 1040), line 28.
Each of the following items is discussed in detail after the list.
Amortizable premium on taxable bonds.
Casualty and theft losses from income- producing property.
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 disabilities.
Loss from other activities from Schedule K-1 (Form 1065-B), box 2.
Repayments of more than $3,000 under a claim of right.
Unrecovered investment in an annuity.
Amortizable Premium 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.
Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. For more information, see
Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses.
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 Form 4684, Section B. You may also have to include the loss on Form 4797
if you are otherwise required to file that form. To figure your deduction, add all casualty or theft losses from this type
of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. For more information on casualty and theft losses,
see chapter 25.
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. See Publication 559 for more information.
Gambling Losses Up to the Amount of Gambling Winnings
You must report the full amount of your gambling winnings for the year on Form 1040, line 21. You deduct your gambling losses
for the year on Schedule A (Form 1040), line 28. 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 activity.
The name and address or location of the gambling establishment.
The names of other persons present with you at the gambling establishment.
The amount(s) you won or lost.
See Publication 529 for more information.
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 for other expenses in connection with your place of work that are necessary for you to be able to work.
If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E,
or F) used to report your business income and expenses.
Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2
If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28. It is
not subject to the passive activity limitations.
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
in chapter 12 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. See chapter 10 for more information about the tax treatment of pensions and annuities.
Examples of nondeductible expenses are listed next. The list is followed by discussions of additional nondeductible expenses.
List of Nondeductible Expenses
Broker's commissions that you paid in connection with your IRA or other investment property.
Burial or funeral expenses, including the cost of a cemetery lot.
Fees and licenses, such as car licenses, marriage licenses, and dog tags.
Hobby losses, but see
Home repairs, insurance, and rent.
Illegal bribes and kickbacks—See Bribes and kickbacks in chapter 11 of Publication 535.
Losses from the sale of your home, furniture, personal car, etc.
Personal disability insurance premiums.
Personal, living, or family expenses.
The value of wages never received or lost vacation time.
You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. See chapter 37.
You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the
office. These include qualification and registration fees for primary elections.
You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign.
Check-Writing Fees on Personal Account
If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even
if the account pays interest.
Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social
purpose. This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs.
You cannot deduct dues paid to an organization if one of its main purposes is to:
Conduct entertainment activities for members or their guests, or
Provide members or their guests with access to entertainment facilities.
Dues paid to airline, hotel, and luncheon clubs are not deductible.
You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work).
If you haul tools, instruments, or other items, in your car to and from work, you can deduct only the additional cost of hauling
the items such as the rent on a trailer to carry the items.
You cannot deduct fines or penalties you pay to a governmental unit for violating a law. This includes an amount paid in settlement
of your actual or potential liability for a fine or penalty (civil or criminal). Fines or penalties include parking tickets,
tax penalties, and penalties deducted from teachers' paychecks after an illegal strike.
You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as
might be required of a law enforcement officer.
You cannot deduct the cost of a home security system as a miscellaneous deduction. However, you may be able to claim a deduction
for a home security system as a business expense if you have a home office. See
under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587.
You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes.
You cannot deduct premiums you pay on your life insurance. You may be able to deduct, as alimony, premiums you pay on life
insurance policies assigned to your former spouse. See chapter 18 for information on alimony.
You generally cannot deduct amounts paid or incurred for lobbying expenses. These include expenses to:
Participate or intervene in any political campaign for, or against, any candidate for public office,
Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums,
Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions
of those officials.
Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of
Dues used for lobbying.
If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used
to pay nondeductible lobbying expenses, you cannot deduct that part. See Lobbying Expenses
in Publication 529 for information on exceptions.
Lost or Mislaid Cash or Property
You cannot deduct a loss based on the mere disappearance of money or property. However, an accidental loss or disappearance
of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. See
A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. The diamond falls from the ring
and is never found. The loss of the diamond is a casualty.
You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. See chapter 26 for information on deductible expenses while traveling away from home.
You cannot deduct the cost of meals while working late. However, you may be able to claim a deduction if the cost of meals
is a deductible entertainment expense, or if you are traveling away from home. See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home.
You cannot deduct personal legal expenses such as those for the following.
Custody of children.
Breach of promise to marry suit.
Civil or criminal charges resulting from a personal relationship.
Damages for personal injury, except for certain unlawful discrimination and whistleblower claims.
Preparation of a title (or defense or perfection of a title).
Preparation of a will.
Property claims or property settlement in a divorce.
You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property.
You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Advertisements
in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not
Professional Accreditation Fees
You cannot deduct professional accreditation fees such as the following.
Accounting certificate fees paid for the initial right to practice accounting.
Bar exam fees and incidental expenses in securing initial admission to the bar.
Medical and dental license fees paid to get initial licensing.
You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation.
Relief Fund Contributions
You cannot deduct contributions paid to a private plan that pays benefits to any covered employee who cannot work because
of any injury or illness not related to the job.
Residential Telephone Service
You cannot deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence,
even if it is used in a trade or business.
You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own
stock but have no other interest. You cannot deduct these expenses even if you are attending the meeting to get information
that would be useful in making further investments.
Tax-Exempt Income Expenses
You cannot deduct expenses to produce tax-exempt income. You cannot deduct interest on a debt incurred or continued to buy
If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each
type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can
During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. In earning this income, you had
total expenses of $500 during the year. You cannot identify the amount of each expense item that is for each income item.
Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest.
You can deduct, subject to the 2% limit, expenses of $400 (80% of $500).
Travel Expenses for Another Individual
You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies
you (or your employee) on business or personal travel. See chapter 26 for more information on deductible travel expenses.
Voluntary Unemployment Benefit Fund Contributions
You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. However, you
can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for
the loss of wages from unemployment caused by business conditions.
You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly
perform your duties.
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