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Tax Court Tailors Outcome to Fit Clothes Deduction

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After a nurse bought clothing for work at a clinic at her own expense and deducted it from her taxes, she wound up in front of the Tax Court to ensure the purchase was a legitimate business-related tax deduction. In this case, she prevailed. Ken Berry offers the details below.

Jul 7th 2022
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Under prior law, an individual could deduct the unreimbursed cost of clothing or uniforms used for business that weren’t suitable for everyday wear. In a new case, Romana, TC Summary Opinion 2022-9, 6/16/22, the Tax Court allowed a nurse to deduct the cost and upkeep of scrub-like clothing that she purchased for herself. 

This was an aggressive approach by the taxpayer that resulted in a somewhat surprising tax victory. 

Background: Prior to 2018, an individual itemizer could deduct the cost of qualified miscellaneous expenses to the extent that the total exceeded 2 percent of adjusted gross income (AGI) for the year. For example, if you had an AGI of $100,000 and incurred $3,000 in miscellaneous expenses, your deduction was limited to $1,000. If you had only $1,500 in miscellaneous expenses, no deduction was allowed. 

However, the Tax Cuts and Jobs Act (TCJA) suspended the deduction for miscellaneous expenses from 2018 through 2025. So, even if you qualify under the regular rules, you can’t deduct any miscellaneous expenses in 2022. The deduction is scheduled to be reinstated in 2026.

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Replies (2)

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By Skipper50
Jul 8th 2022 10:47 EDT

Deducted how and where?

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Replying to Skipper50:
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By Clp1001
Jul 14th 2022 11:39 EDT

This was for tax year 2017. So, Miscellaneous Itemized Deductions were still on Sch. A.

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