2% of AGI rule for work related expenses--how does it work?

Question

OK tax buffs...I've got a question that I couldn't find a clear answer to on IRS's website:

My work-related expenses (not reimbursed by my employer) for 2006 total about 2.6% of my AGI. I was reading about work-related deductions on the IRS website, and there seems to be a "limitation" of 2% of AGI to take this deduction.

What does this mean? Does it mean that your work-related expenses must total at least 2% of your AGI in order to be able to deduct them? Or can you ONLY deduct work-related expenses above and beyond 2% of your AGI? Or are you only allowed to deduct work-related expenses UP TO 2% of your AGI?

Please help...I am pretty confused. I've always used TurboTax but this year I might get some professional help!

Answer 1

The 2% limitation means that you can only deduct the amount of your work-related expenses that exceeds 2% of your AGI.

TurboTax shouldn't have any trouble with that - would just calculate the 2% of your AGI, and subtract that amount from what you enter as work-related expenses. You'd enter your entire amount of expenses, and let TurboTax do the calculation.

Good luck. If that's the only thing complex about your return this year, and you've been doing it yourself, you probably don't need professional help on it.

Answer 2

Only the amount over 2% of AGI becomes deductable. There are a few other items grouped with these deductions such as tax prep fees (what you spent for Turbo Tax) that can be added to the work-related expenses.

Keep in mind, that these are itemized deductions. If you do not itemize, there is no deduction.