Question

Which of the following deductions are classified as miscellaneous itemized deductions subject to the 2% of AGI floor?

a. Unreimbursed employee expenses
b. Gambling losses
c. Hobby expenses
d. Investment expenses
e. Tax return preparation fees
f. Investment losses
g. Casualty losses

Answer 1

Unreimbursed employee expenses, tax return preparation fees, and investment expenses are classified as miscellaneous itemized deductions subject to the 2% of AGI floor.

Step-by-step explanation:

The deductions that are classified as miscellaneous itemized deductions subject to the 2% of AGI (Adjusted Gross Income) floor are: Unreimbursed employee expenses: These are expenses that an employee pays out of pocket and is not reimbursed by their employer, such as work-related travel expenses or professional association fees.

Tax return preparation fees: These are the fees paid to a professional tax preparer for preparing and filing an individual's tax return. Investment expenses: These are expenses incurred in the process of managing investments, such as fees paid to financial advisors or the cost of investment research. The other deductions listed (gambling losses, hobby expenses, investment losses, and casualty losses) may be deductible in certain circumstances, but they are not classified as miscellaneous itemized deductions subject to the 2% of AGI floor.

Answer 2

Tax return preparation fees and unreimbursed employee expenses are the only deductions among the options classified as miscellaneous itemized deductions subject to the 2% of AGI floor.

Therefore, option e. Tax return preparation fees and a. Unreimbursed employee expenses are correct.

Step-by-step explanation:

Miscellaneous itemized deductions, subject to the 2% of adjusted gross income (AGI) floor, include various expenses incurred in the production of income or for the management of property held for producing income. Among the given options:

Tax return preparation fees are considered miscellaneous itemized deductions and are subject to the 2% AGI floor. This includes fees paid to professionals for the preparation of income tax returns.

Unreimbursed employee expenses, such as job-related expenses that are not reimbursed by the employer, also fall under miscellaneous itemized deductions subject to the 2% AGI floor. This can include expenses like business-related travel, uniforms, and job-related education.

Other options, such as gambling losses, hobby expenses, investment expenses, investment losses, and casualty losses, do not fall under miscellaneous itemized deductions subject to the 2% AGI floor.

Therefore, option e. Tax return preparation fees and a. Unreimbursed employee expenses are correct.