Deductions Not Subject to the 2% Limit
The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the 2% floor on miscellaneous itemized deductions for tax years 2018 through 2025. This means that, for the 2025 tax year, taxpayers can deduct certain expenses without needing to exceed 2% of their adjusted gross income (AGI). The article correctly lists deductions not subject to the 2% limit, including:
- Casualty or theft losses from income-producing property.
- Gambling losses to the extent of gambling winnings.
- Work expenses of persons with disabilities, if they are impairment-related.
- Losses from Ponzi-type investment schemes.
Deductions Subject to the 2% Limit (Suspended for 2018–2025):
While the TCJA suspended many miscellaneous itemized deductions subject to the 2% limit for tax years 2018 through 2025, some deductions remain unaffected. However, it’s essential to note that the following deductions are currently suspended for tax years 2018 through 2025 under the TCJA, unless Congress passes new legislation to reinstate them:
- Unreimbursed employee expenses.
- Tax preparation fees.
- Legal fees related to taxable income.
- Expenses for managing, maintaining, and conserving property held to produce taxable income.
For the 2025 tax year, these deductions will generally not be available unless new legislation is enacted to reinstate them. This suspension is an important aspect of the TCJA and should be considered when planning tax strategies for the upcoming years. The article fails to mention this suspension, which is a significant omission that taxpayers should be aware of.
In summary, while the article provides useful information, it overlooks the suspension of many miscellaneous itemized deductions for the 2025 tax year under the TCJA. Taxpayers should be aware that, unless new legislation is enacted, these deductions are generally not available for the 2025 tax year. For the most up-to-date guidance, it’s essential to stay informed about any changes in tax laws that could impact the availability of these deductions.
If you have any questions or need personalized guidance on the topics covered above, don’t hesitate to reach out. Our team is here to help you navigate the complexities of tax laws and ensure you get the maximum benefits available. Contact us today through our website at LosangelesCPA.org, call us at (323) 902-1000, or email us directly at dmitriy@losangelesCPA.org. We look forward to assisting you!
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