Employment-Related Expenses. Mike incurs the following employment-related expens

Question

Employment-Related Expenses. Mike incurs the following employment-related expenses
in the current year:
Actual automobile expenses ` $ 2,500
Moving expenses (deductible under Sec. 217) 4,000
Entertainment expenses 1,500
Travel expenses (including $500 of business meals) 2,500
Professional dues and subscriptions 500
Total 1100

Mike’s AGI is $120,000 before any of the above expenses are deducted. None of the
expenses listed above are reimbursed by Mike’s employer. He has no other miscellaneous
itemized deductions and does not use the standard deduction.
a. What is the amount of Mike’s deduction for employment-related expenses?
b. How are these items reported in Mike’s tax return?

Explanation / Answer

Actual automobile expenses $ 2,500 Moving expenses 4,000 Entertainment expenses 1,500 * 50% = 750 Travel expenses (including $500 of business meals) 2,500; 2000 + 50% of meals = 2250 Professional dues and subscriptions 500 Total $10,000 2% of Mike’s AGI is $120,000*0.02 = 2400 Deduction = 10,000 – 2400 = 7600. Answer to a is $7,600 b. They are reported on Schedule A under miscellaneous deductions subject to the 2% of AGI floor. They end up on the second page of the 1040 and are deductions from AGI.

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