What Is IRS Publication 529 (Miscellaneous Deductions)?
IRS Publication 529, or Miscellaneous Deductions, is a document published by the Internal Revenue Service (IRS) detailing miscellaneous expenses that could previously be reported as itemized deductions on Schedule A of Form 1040 or Form 1040NR.
The deduction was calculated by subtracting 2% of the adjusted gross income (AGI) from the total amount of expenses listed after any other deduction limit. Expenses could be claimed if they were considered ordinary and necessary in a particular line of business.
- IRS Publication 529 explains which expenses you can claim as miscellaneous itemized deductions on Schedule A of Form 1040 or Form 1040NR.
- Miscellaneous itemized deductions are those deductions that would have been subject to the 2% of adjusted gross income limitation.
- Since the Tax Cuts and Jobs Act of 2017, you can no longer claim any miscellaneous itemized deductions, unless you fall into one of the qualified categories of employment claiming a deduction relating to unreimbursed employee expenses.
Understanding IRS Publication 529 (Miscellaneous Deductions)
IRS Publication 529 (Miscellaneous Deductions) explained how taxpayers could claim expenses as itemized miscellaneous deductions. Miscellaneous deductions are often those that are not reimbursed by employers but are still incurred by employees. Some items which may seem ordinary and necessary may actually be considered personal expenses by the IRS, and thus not subject to a tax deduction.
Revisions to IRS Publication 529
The various expenditures that can be claimed under the IRS Publication 529 miscellaneous itemized deduction rule tend to change over time. Deductions that were allowable in one tax year could be phased out during the next. Therefore, it is very important that taxpayers and tax preparers remain current with the annual revisions to IRS Publication 529.
Miscellaneous Deductions and the Tax Reform Act
In December 2017, Congress passed the Tax Cuts and Jobs Act, one of the biggest tax reform bills of all time. The new legislation had a tremendous effect on how businesses and individuals are taxed, and miscellaneous deduction provisions were dramatically impacted.
For example, the new law suspended a number of miscellaneous itemized deductions through 2025, including deductions for moving expenses, except for active duty military personnel; home office expenses; licensing and regulatory fees; union dues; professional society dues; business bad debts; work clothes that are not suitable for everyday use; and many others. Alimony payments will no longer be deductible after 2019; this change is permanent.
The reform also limited the mortgage interest deduction for married couples filing jointly, and it capped the deduction for state and local taxes at $10,000. Both of these changes are in effect through 2025.
The law left the charitable contributions deduction intact, with minor alterations, and the student loan interest deduction was not affected. In 2018, medical expenses in excess of 7.5% of adjusted gross income were deductible for all taxpayers, not just those aged 65 or older.