The Tax Blotter - March 6, 2024 - CPA Practice Advisor

The Tax Blotter is a summary of recent tax news, rulings and legislation.

Previously, taxpayers that itemized could deduct miscellaneous expenses on their personal returns, but the Tax Cuts and Jobs Act (TCJA) suspended this tax break.

Set to return. Prior to 2018, you could write off miscellaneous expenses—including unreimbursed employee business expenses and certain production-of-income expenses—above 2% of your adjusted gross income (AGI). For instance, if you had an AGI of $100,000 with $3,000 in miscellaneous expenses, your deduction was $1,000. Be aware that this tax deduction is scheduled for a comeback. Barring any further action by Congress, it will be reinstated after 2025 under the TCJA.

Place your bet. Don’t think that the suspension of the miscellaneous expense deduction applies to gambling losses. Under current law, you can still write off your documented gambling losses up to the amount of your winnings. For example, if you won $5,000 at casinos in 2023 and lost $4,000, you may write off the entire $4,000 on your 2023 return. There’s no 2%-of-AGI threshold like there is with miscellaneous expenses. But gambling losses are deductible only if you itemize.

That’s show biz. The tax law allows performing artists to deduct unreimbursed employee business expenses. But you must have two or more employers, earning at least $200 from each one, incur expenses exceeding 10% of income and have an adjusted gross income (AGI) of $16,000 or less. In a new case, a performer who earned over $80,000 from commercials and voice-over work asked the Tax Court to cut her some slack. The result? No dice (Jonas, TC No. 575-22S, 2/9/24).

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