J.K. Lasser's Your Income Tax 2015: For Preparing Your 2014 Tax Return

Chapter 19Deducting Job Costs and Other Miscellaneous Expenses

On Schedule A (Form 1040), you may be able to deduct a portion of miscellaneous expenses covering a wide and varied range of items, such as employee travel and entertainment expenses, work clothes expenses, union and employee professional dues, investment expenses, legal expenses, tax preparation expenses, and educational expenses. They share a significant limitation: the 2% of adjusted gross income (AGI) floor. If your expenses do not exceed this floor, you may not deduct them. If the expenses exceed the floor, only the excess is deductible. Even before applying the 2% AGI floor, employees who incur unreimbursed meal and entertainment costs must reduce their meal and entertainment costs by 50% (20.25). After applying the 2% floor, the net deduction may be further reduced on Schedule A (19.1) if you are subject to the overall reduction of itemized deductions that applies to certain higher income taxpayers (13.7).

The allowable deduction from Schedule A (after the 2% floor and the overall reduction if applicable) must be added back to income in determining if you are subject to AMT (23.2) and if you are, the benefit of the Schedule A deduction is effectively lost. Some miscellaneous expenses, such as gambling losses and impairment-related work expenses, are not subject to the 2% AGI floor, and gambling losses also are not subject to the overall limitation on itemized deductions (13.7).

Miscellaneous deductions, except ...