Final answer:
Miscellaneous itemized deductions once subject to the 2% AGI floor included unreimbursed employee expenses, hobby expenses, investment expenses, and tax return preparation fees, but these were suspended through 2025 by the TCJA.
Step-by-step explanation:
The question asks which of the listed items are classified as miscellaneous itemized deductions subject to the 2% of adjusted gross income (AGI) floor. Prior to the Tax Cuts and Jobs Act (TCJA) which took effect in 2018, miscellaneous itemized deductions that exceeded 2% of a taxpayer's AGI could be deducted. These deductions once included:
- Unreimbursed employee expenses,
- Hobby expenses,
- Investment expenses,
- Tax return preparation fees.
However, following the TCJA, through 2025, those deductions have been suspended, meaning taxpayers can no longer deduct these expenses. It's important to note that the TCJA did not affect other itemized deductions, such as:
- Gambling losses to the extent of gambling winnings,
- Investment losses, and
- Casualty losses in federally declared disaster areas.
These particular deductions are not subject to the 2% AGI floor and can be claimed separately from miscellaneous itemized deductions.