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About IRS Publication 529: Miscellaneous Deductions

Updated: November 25, 2022

If you’re looking for information on miscellaneous deductions, you’ve come to the right place. IRS Publication 529 provides an overview of what can be deducted and how to deduct it. This publication is a great resource for anyone who wants to take advantage of all the deductions available to them.

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    KEY TAKEAWAYS

    • IRS Publication 529 breaks down the expenses you might be able to claim as miscellaneous itemized deductions. You claim these expenses on Schedule A of Form 1040.
    • Some common miscellaneous expenses include education and training expenses and home office expenses. Charitable contributions are also common.
    • You cannot deduct funeral expenses or any losses incurred while gambling.

    What Is IRS Publication 529?

    529 is a tax-advantaged savings plan designed to encourage saving for future educational expenses. 529 plans are sometimes called qualified tuition plans (QTPs). They are sponsored by states, state agencies, or educational institutions. They are authorized by Section 529 of the Internal Revenue Code. 

    There are two types of 529 plans: 

    • Prepaid Tuition Plans – Prepaid tuition plans let you buy tuition credits at colleges and universities in advance. The credits can be used for undergraduate and sometimes graduate level courses. When the beneficiary uses the credits, they generally pay no or only reduced taxes on the earnings.
    • College Savings Plans – College savings plans are similar to 401(k) retirement savings plans. This is since they offer tax-deferred growth of earnings and also offer federal and state tax breaks. College savings plans can be used at eligible colleges and universities nationwide. It could be for tuition, books, fees, and other eligible expenses. Withdrawals from a college savings plan are taxed as income to the beneficiary. But, they’re not subject to federal penalties if used for qualified education expenses.

    If you’re saving for a child’s college education, you may want to consider a 529 plan. These tax-advantaged accounts offer several benefits. This includes the potential for federal and state tax breaks on your contributions. With a 529 plan, you can choose between a prepaid tuition plan or a college savings plan.

    Both types of 529 plans offer tax-deferred growth of earnings. They also allow you to withdraw funds penalty-free for qualified education expenses.

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    Deductions for Unreimbursed Employee Expenses

    It’s no secret that employees are often required to spend their own money on work-related expenses. This can add up quickly, and it’s not always easy to get reimbursement from your employer. 

    Luckily, the IRS allows you to deduct certain unreimbursed employee expenses on your taxes. Publication 529 outlines a few different types of expenses that can be deducted. 

    These include things like:

    • Professional journals
    • Subscriptions
    • Education and training expenses
    • Certain travel expenses

    If you have any employee expenses that are not reimbursed, be sure to take advantage of this standard deduction. It can help offset the cost of doing your job, and it’s one less thing you have to worry about for your taxable income.

    Miscellaneous Deductions and the Tax Reform Act

    The Tax Reform Act of 1986 changed the way miscellaneous deductions are figured. Prior to the Tax Reform Act, miscellaneous standard deductions were taken as a percentage of adjusted gross income. It instituted a new rule for miscellaneous standard deductions. They can only be taken to the extent that they exceed an excess of 2 percent of adjusted gross income. 

    This means that miscellaneous deductible expenses are now subject to a threshold. Taxpayers can only deduct expenses that exceed 2 percent of their adjusted gross income. This can make it difficult to deduct certain expenses that may be necessary but do not always exceed the 2 percent threshold. For example, this can happen with some business-related expenses.  

    The Tax Reform Act also eliminated some deductions that were previously allowed. This included investment advisory fees and safe deposit box rental fees. This means that taxpayers must be more careful than ever when it comes to determining which expenses are deductible and which are not. 

    Despite these changes, there are still some miscellaneous itemized deductions that can be taken advantage of for the tax year. These include:

    • Certain job-related expenses, such as uniforms and tools
    • Certain educational expenses 

    By understanding these rules, taxpayers can take advantage of all the deductions.

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    Expenses that Can Be Deducted

    While publication 529 doesn’t allow for miscellaneous deductions, there are deductible expenses. These include:

    • Expenses For Medical And Dental Care – This deduction can be used for both yourself and your dependents
    • Education Expenses – This deduction can be used for both yourself and your dependents
    • Home Office Expenses – If you use part of your home exclusively for business purposes, you may be able to deduct some expenses. This includes a portion of your mortgage interest, property taxes, insurance, and utilities
    • Charitable Donations – If you donate money or property to a qualified charity, you may be able to deduct the value of your donation on your income tax

    They might also include various itemized deductions when it comes to adjusted gross income and taxable income.

    Expenses That Cannot Be Deducted

    There are a lot of expenses that we have in our lives that we think should be able to be deducted from our taxes. Unfortunately, the IRS has a very strict definition of what qualifies as a deductible expense. 

    In Publication 529, the IRS lists a number of expenses that cannot be deducted, including: 

    • Funeral expenses
    • Losses incurred from gambling
    • Medical expenses (unless they’re for preventive care or required for treatment of a specific disease or condition)
    • Travel expenses (unless they are directly related to business, charitable, or educational activities) 

    It can be frustrating to realize that some of our biggest expenses cannot be deducted from our taxes. But it’s important to remember  the IRS only allows deductions for expenses that are considered necessary. 

    You may not be able to deduct our gambling losses or travel expenses. But you can take comfort in knowing you’re only paying taxes on the income that you actually need.

    Overall, deductions for unreimbursed employee expenses can save you a lot of money on your taxes. However, there are some restrictions on what can be deducted. It is important to consult a tax professional to make sure you are taking advantage of all the deductions available to you.

    Summary 

    IRS Publication 529 is a specific document that’s published by the IRS. It can also be commonly referred to as Miscellaneous Deductions. It outlines which expenses could get reported as itemized deductions. This is done when you submit Schedule A of Form 1040 or Form 1040NR. 

    You can claim these deductions if the expenses are ordinary and necessary for your line of work. Some common expenses are educational, charitable, home office, and medical expenses. With that said, you cannot claim funeral expenses or losses from gambling in an itemized deduction.

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    FAQs About IRS Publication 529

    How Do I Report 529 Distributions On My Taxes?

    You will include the details on your federal income tax return. This will be Schedule 1 Form 1040, Line 8. Or, you can fill out Form 1040NR, Line 21.

    How Do You Prove 529 Expenses?

    Like any type of expense, you will have to keep and provide necessary documentation such as receipts from the tax year. It’s important to keep accurate records of everything. This includes miscellaneous expenses and their total amount. You will also be subject to state and local taxes.

    Do I Need Receipts for 529 Expenses?

    Yes. Just like any other expense, you must keep accurate records and documentation for all your expenses should you need them.

    What Is Adjusted Gross Income (AGI)?

    The Internal Revenue Service (IRS) utilizes your adjusted gross income (AGI) amount to calculate your annual income tax liability.

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