Course:  Income Tax Planning
Lesson 6: Employer-Sponsored Total Income Exclusions

Student Question:


Could you explain the Business Deduction for work related expense in very simple language.  I don’t quite follow whether it’s a deduction or not.



Instructor Response:

Hello Kyle,
If any employee-incurred expenses related to her employer’s business, such as gifts to customers, for example, those expenses were once potentially deductible in an itemized deduction category known as Miscellaneous Deductions In Excess of 2% of Adjusted Gross Income.  For example, if a taxpayer had an AGI of $100,000 and $1,999 of miscellaneous expenses, the taxpayer would have had a $0 Miscellaneous Itemized Deduction.  However, if the taxpayer had $3,000 in such expenses, the expenses in excess of $2,000 (2% of AG) would have been a miscellaneous itemized deduction of $1,000. 
That entire itemized deduction was eliminated by the Tax Cuts and Jobs Act.  Hence, it is no longer possible to deduct miscellaneous deductions subject to the 2% AGI limit. 
Onward and Upward,