Which of the following expenses is deductible, but subject to the 2% limitation on Form 1040, schedule a;job expenses and most other miscellaneous itemized deductions?
a. a blue suit for an accountant
b. appraisal fees on the sale of a personal residence
c. uniforms for a UPS delivery person
d. the cost of hauling tools to work in the trunk of a car
To determine which of the given expenses is deductible but subject to the 2% limitation on Form 1040, Schedule A, we first need to understand what the 2% limitation refers to.
The 2% limitation applies to certain miscellaneous itemized deductions, which are expenses incurred in the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income. These expenses can only be deducted to the extent that they exceed 2% of your adjusted gross income (AGI).
Now let's break down the options provided:
a. A blue suit for an accountant: This expense is generally not deductible as a job expense since it is considered a personal expense. Therefore, it is not subject to the 2% limitation.
b. Appraisal fees on the sale of a personal residence: The fees paid for an appraisal in relation to the sale of a personal residence are deductible as a miscellaneous itemized deduction. However, they are subject to the 2% limitation.
c. Uniforms for a UPS delivery person: The cost of uniforms purchased for work is deductible as a job expense. However, this type of expense is not subject to the 2% limitation.
d. The cost of hauling tools to work in the trunk of a car: The cost of hauling tools to work is considered a job expense and is deductible. However, this expense is not subject to the 2% limitation.
Given the options, the only expense that is deductible but subject to the 2% limitation is: b. Appraisal fees on the sale of a personal residence.