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Taxmap/pub17/p17-157.htm#TXMP3b052da1 Deductions   Not Subject to   the 2% Limit

Itemized Deduction, 2% limit

You can deduct the items listed below as miscellaneous itemized deductions. They are not subject to the 2% limit. Report these items on line 27, Schedule A (Form 1040).

Taxmap/pub17/p17-157.htm#TXMP2da72f18 List of Deductions

Deduction, List

Each of the following items is discussed in detail after the list.

• Amortizable premium on taxable bonds.
• Casualty and theft losses from income-producing property.
• Federal estate tax on income in respect of a decedent.
• Gambling losses up to the amount of gambling winnings.
• Impairment-related work expenses of persons with disabilities.
• Repayments of more than $3,000 under a claim of right.
• Unrecovered investment in an annuity.

Taxmap/pub17/p17-157.htm#TXMP182ddff8 Amortizable Premium   on Taxable Bonds

Amortizable Premium on Taxable Bonds

In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. You can elect to amortize the premium on taxable bonds. The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item.

Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses.

Taxmap/pub17/p17-157.htm#TXMP41289691 Certain Casualty and   Theft Losses

Casualty and Theft Loss

You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). First, report the loss in Section B of Form 4684. You may also have to include the loss on Form 4797 if you are otherwise required to file that form. To figure your deduction, add all casualty or theft losses from this type of property included on line 32 of Form 4684, line 38b of Form 4684, or line 18a of Form 4797. For more information on casualty and theft losses, see chapter 27.

Taxmap/pub17/p17-157.htm#TXMP0c5f81ac Federal Estate Tax on Income   in Respect of a Decedent

Federal Estate Tax on Income in Respect of a Decedent

You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. See Publication 559 for more information.

Taxmap/pub17/p17-157.htm#TXMP146d2448 Gambling Losses Up to the   Amount of Gambling Winnings

Gambling

You must report the full amount of your gambling winnings for the year on Form 1040, line 21. You deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.

You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Therefore, your records should show your winnings separately from your losses.

Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings. Your diary should contain at least the following information. The date and type of your specific wager or wagering activity. The name and address or location of the gambling establishment. The names of other persons present with you at the gambling establishment. The amount(s) you won or lost. See Publication 529 for more information.

Taxmap/pub17/p17-157.htm#TXMP209182b7 Impairment-Related   Work Expenses

Impairment-Related Work Expenses

If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses.

Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work.

Taxmap/pub17/p17-157.htm#TXMP5fc6c62a Where to report.

If you are an employee, you enter impairment-related work expenses on Form 2106 or Form 2106-EZ. Enter on line 27, Schedule A (Form 1040), that part of the amount on line 10 of Form 2106, or line 6 of Form 2106-EZ, that is related to your impairment. Enter the amount that is unrelated to your impairment on line 20, Schedule A (Form 1040).

Taxmap/pub17/p17-157.htm#TXMP6bc4fa29 Repayments Under   Claim of Right

Repayments Under Claim of Right

If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid or take a credit against your tax. See Repayments in chapter 13 for more information.

Taxmap/pub17/p17-157.htm#TXMP21740522 Unrecovered Investment   in Annuity

Unrecovered Investment in Annuity

A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. See chapter 11 for more information about the tax treatment of pensions and annuities.

Taxmap/pub17/p17-157.htm#TXMP45af828b Officials Paid on a Fee Basis

Officials Paid on a Fee Basis

If you are a fee-basis official, you can claim your expenses in performing services in that job as an adjustment to income rather than as a miscellaneous itemized deduction. To qualify as a fee-basis official, you must be employed by a state or local government and be paid in whole or in part on a fee basis.

Taxmap/pub17/p17-157.htm#TXMP475e99c6 Where to report.

If you qualify as a fee-basis official, you should first complete Form 2106 or Form 2106-EZ. Then include your expenses in performing services in that job (line 10 of Form 2106 or line 6 of Form 2106-EZ) on line 24 of Form 1040.

Taxmap/pub17/p17-157.htm#TXMP7830fb36 Armed Forces Reservists Traveling More Than 100 Miles From Home

Armed Forces Reservists

If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. For more information, see Publication 463.

Taxmap/pub17/p17-157.htm#TXMP443847af Member of a reserve component.

You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Naval, Marine Corps, Air Force, or Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service.

Taxmap/pub17/p17-157.htm#TXMP7c55519c Where to report.

If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from line 10 of Form 2106 or line 6 of Form 2106-EZ in the total on line 24 of Form 1040. Subtract this amount from the total on line 10 of Form 2106 or line 6 of Form 2106-EZ and deduct the balance as an itemized deduction on line 20 of Schedule A (Form 1040).

You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on line 20 of Schedule A (Form 1040).

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