Not every cost made on behalf of a business fits neatly into a deduction category or, in fact, is even deductible. As long as the cost is ordinary and necessary for your business and is not designated as “nondeductible” by the tax law, you can deduct it in a catchall category called “other expenses.” Examples of other expenses include:
- Prizes to customers or suppliers
- Research expenses (other than costs related to the research credit or capitalized and amortized over 60 or more months, as explained in Chapter 14)
- Trade show fees
Where to Deduct Miscellaneous Business Expenses
In general, employee business expenses are deductible as itemized expenses on Schedule A, subject to the 2%-of-AGI rule discussed in Chapter 1.
SPECIAL RULE FOR PERFORMING ARTISTS Expenses are fully deductible from gross income if you meet certain tests:
- You must perform services as a performing artist as an employee for at least 2 employers.
- Your business deductions must exceed 10% of your gross income from the performance of services.
- Your AGI without regard to these business deductions must not exceed $16,000.
If you meet these tests to fully deduct your expenses, they are not claimed as itemized deductions on Schedule A, but rather as an adjustment to gross income on page 1 of Form 1040. Be sure to write “QPA” next to your deduction.
HANDICAPPED PERSONS Business-related expenses of disabled or handicapped individuals are itemized deductions that are not subject to the ...