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Miscellaneous deductions include all deductible items not in the categories of medical, taxes, interest, charitable contributions or casualty losses. This category is subdivided into two groups.
Subject to 2% Floor: This is the catchall of all other tax deductions not reportable elsewhere on your return. This category includes deductions such as legal fees, tax preparation fees, investment expenses, job-hunting and many more. The area that yields the largest deductions is employee business and job related expenses. These expenses are reported on Form 2106 and are reduced by any employer reimbursement. Excess expenses then become a 2% miscellaneous deduction. Employee expenses that you should consider are:
Any costs of tuition, books, supplies and other education related expenses that are not available for an education credit (see Credit Section) will be deductible as a miscellaneous itemized deduction if the education course is required by your employer or by law to keep the same job or improves or maintains skills for the existing job.
No deduction can be claimed if the education course is required to meet the minimum requirements to qualify for a new job. For example, continuing professional education courses attended by accountants are deductible but the costs of an accountant attending law school are treated as nondeductible. The law school degree qualifies the accountant for a new trade or business.
Expenses paid or reimbursed by your employer under an Employer Education Assistance Program does not qualify for the deduction. Employer Education Assistance Program provides each employee with up to $5,250 of tax free education assistance per year. This benefit is not available for graduate courses. This law is scheduled to expire June 30, 2000.
This law has been sunset for many years now. In the past, Congress has always reinstated the law in eleventh hour legislation.