There are three basic areas under miscellaneous expenses:

1. job-related expenses,
2. tax preparation fees or advice and
3. the other expenses category.

You can include business expenses not reimbursed by your employer, such as union dues or dues to a professional society. You can deduct the cost of uniforms, but only if they're not appropriate to wear outside the workplace, for safety or if the clothing is spoiled because of the job.  For example, a welder will wear long sleeves (usually a denim fabric) to protect the forearms and the shirts are burned from the sparks.   Entertainers have different rules and may deduct some of the costumes.   Certain occupations may deduct the cost of clothing because of special rules the IRS has promulgated - for example, a beautician may deduct the costs of smocks worn.   Safety equipment can include special shoes, hard hats, safety goggles or eyeglasses with safety lenses.

You can deduct the cost of classes used to improve your job skills, but  not classes to change careers or enter a new field.   And you can claim the cost of  subscriptions to publications useful in your work.

You may deduct the cost of all that resume writing, copying and mailing or any other cost related to a job search.  This will include transportation.

You may also claim fees you paid to your CPA for preparing your tax return and a fee for filing it electronically.   Any tax advice is also deductible.

In the mysterious "other expense" category you could include legal and accounting fees, clerical help and office rent, fees for trust acounts
and the cost of a safety deposit box.  Legal fees fall in a special category.   Only the fees for tax advice or for producing income are generally deductible.   Check with Bob Parrish CPA PC.

You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 34.

Generally, you apply the 2% limit after you apply any other deduction limit. For example, the 50% (or 55%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meal, Entertainment, and Gift Expenses) is applied before you subtract 2% of your adjusted gross income.

Deductions subject to the 2% limit are discussed in the two general categories that are shown on Schedule A: unreimbursed employee expenses and other expenses (including tax preparation fees).

Impairment-related work expenses. If you have a physical or mental disability, certain expenses you incur that allow you to work may not be subject to the 2% limit. See Impairment-Related Work Expenses under Deductions Not Subject to the 2% Limit, later.

Performing artists. If you are a qualified performing artist, you may be able to deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. See Performing Artists under Deductions Not Subject to the 2% Limit, later.

State and local government officials paid on a fee basis. If you performed services as an employee of a state or local government and you were paid in whole or in part on a fee basis, you can claim your trade or business expenses in performing those services as an adjustment to gross income, rather than as a miscellaneous deduction. See Officials Paid on a Fee Basis under Deductions Not Subject to the 2% Limit, later.

You can deduct only unreimbursed employee expenses that are:

1. Paid or incurred during your tax year,
2. For carrying on your trade or business of being an employee, and
3. Ordinary and necessary business expenses.

An expense is ordinary if it is common and accepted in your type of trade or business. An expense is necessary if it is appropriate and helpful to your trade or business.

You may be able to deduct the following items as unreimbursed employee expenses.

A business bad debt is a loss from a debt created or acquired in your trade or business. Any other worthless debt is a business bad debt only if there is a very close relationship between the debt and your trade or business when the debt becomes worthless.

A debt has a very close relationship to your trade or business of being an employee if your main motive for incurring the debt is a business reason.

Example. You make a bona fide loan to the corporation you work for. It fails to pay you back. You had to make the loan in order to keep your job. You have a business bad debt as an employee.

You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job.

If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer.

You can claim a depreciation deduction for a computer or cellular telephone that you use in your work as an employee if its use is:

1. For the convenience of your employer, and
2. Required as a condition of your employment.

For the convenience of your employer. This means that your use of the computer or cellular telephone is for a substantial business reason of your employer. You must consider all facts in making this determination. Use of your computer or cellular phone during your regular working hours to carry on your employer's business is generally for the convenience of your employer.

Required as a condition of your employment. This means that you cannot properly perform your duties without the computer or cellular telephone. Whether you can properly perform your duties without it depends on all the facts and circumstances. It is not necessary that your employer explicitly requires you to use your computer or cellular telephone. But neither is it enough that your employer merely states that your use of the item is a condition of your employment.

Example. You are an engineer with an engineering firm. You occasionally take work home at night rather than work late at the office. You own and use a computer that is similar to the one you use at the office to complete your work at home. Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it.

Which depreciation method to use. You generally must depreciate your computer or cellular telephone using the straight line method over the Alternative Depreciation System (ADS) recovery period. You cannot take a section 179 deduction for the item or claim an accelerated depreciation deduction using the General Depreciation System (GDS) unless you meet the more-than-50%-use test. (But if you use your computer in a home office, see the exception below.)

More-than-50%-use test. You meet this test if you use the computer or cellular telephone more than 50% in your work. If you meet this test, you can take a section 179 deduction for the item and you can claim accelerated depreciation using GDS.

Your use of a computer or cellular telephone in connection with investments (described later under Other Expenses) does not count as use in your work. However, you can combine your investment use with your work use in figuring your depreciation deduction.

Exception for computer used in a home office. The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office. You can take a section 179 deduction and claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work.

Reporting your depreciation deduction. Use Part V of Form 4562, Depreciation and Amortization, to claim the depreciation deduction for a cellular telephone or for a computer that you did not use only in your home office. Complete Part I of Form 4562 if you are claiming a section 179 deduction.

Computer used in a home office. Use Part II of Form 4562 to claim the depreciation deduction for a computer you placed in service during 1999 and used only in your home office. Complete Part I of Form 4562 if you are claiming a section 179 deduction.

Do not use Form 4562 to claim the depreciation deduction for a computer you placed in service before 1999 and used only in your home office, unless you are otherwise required to file Form 4562. Instead, report the depreciation directly on the appropriate form. (See How To Report, later.) But if you are otherwise required to file Form 4562, report the depreciation in Part III.

You must maintain records to prove your percentage of business and investment use.

You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. Similar organizations include:

1. Boards of trade,
2. Business leagues,
3. Civic or public service organizations,
4. Real estate boards, and
5. Trade associations.

You cannot deduct dues paid to an organization if one of its main purposes is to:

1. Conduct entertainment activities for members or their guests, or
2. Provide members or their guests with access to entertainment facilities.

Dues paid to airline, hotel, and luncheon clubs are not deductible. See Club Dues under Nondeductible Expenses, later.

Lobbying and political activities. You may not be able to deduct that part of your dues that is for certain lobbying and political activities. See Nondeductible Expenses, later.

You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests.

1. The education maintains or improves skills required in your present work.
2. The education is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer.

If your education meets either of these tests, you can deduct expenses for tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs.

You cannot deduct any qualified education expenses to the extent they were taken into account in determining the amount of an education tax credit or any other tax benefit for education.

Nondeductible educational expenses. You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education:

1. Is needed to meet the minimum educational requirements to qualify you in your work or business, or
2. Will lead to qualifying you in a new trade or business.

If the education qualifies you for a new trade or business, you cannot deduct the educational expenses even if you do not intend to enter that trade or business.

Travel as education. You cannot deduct the cost of travel that in itself constitutes a form of education. For example, a French teacher who travels to France to maintain general familiarity with the French language and culture cannot deduct the cost of the trip as an educational expense.

If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home.

You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively as:

1. Your principal place of business for any trade or business in which you engage, or
2. A place to meet or deal with your patients, clients, or customers in the normal course of your trade or business.

You can also claim this deduction for a separate structure not attached to your home (even if neither (1) nor (2) above applies) if you use it regularly and exclusively for your trade or business.

The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job.

Principal place of business. If you have more than one place of business, the business part of your home is your principal place of business if:

1. You use it for administrative or management activities of your trade or business, and
2. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

Otherwise, the location of your principal place of business generally depends on the relative importance of the activities performed at each location and the time spent at each location.

You should keep records that will give the information needed to figure the deduction according to these rules. Also keep canceled checks or account statements and receipts of the expenses paid to prove the deductions you claim.

You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if:

1. You are looking for a job in a new occupation, or
2. There was a substantial break between the ending of your last job and your looking for a new one.

You cannot deduct your expenses if you are seeking employment for the first time.

Employment and outplacement agency fees. You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation.

Employer pays you back. If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year.

Employer pays the employment agency. If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income.

Résumé. You can deduct amounts you spend for typing, printing, and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation.

Travel and transportation expenses. If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.

Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area.

If you use the standard mileage rate to figure your car expenses, use 32.5 cents per mile through March 31, 1999, and 31 cents per mile thereafter.

You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession.

You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return.

An "income aid payment" is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment.

If you are a college professor, you can deduct your research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to the field of your teaching duties. You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. However, you cannot deduct the cost of travel as a form of education.

Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. You can depreciate the cost of tools that have a useful life substantially beyond the tax year. 

If you are an employee and have ordinary and necessary business-related expenses for travel away from home, local transportation, entertainment, and gifts, you may be able to deduct these expenses. Generally, you must file Form 2106 or 2106-EZ to claim these expenses.

Travel expenses. Travel expenses are those incurred while traveling away from home for your employer. You can deduct travel expenses paid or incurred in connection with a temporary work assignment. Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment.

Travel expenses may include:

Temporary work assignment. A temporary work assignment is one that is expected to end within a fixed and reasonably short time. If your assignment or job away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, it is generally temporary.

Indefinite work assignment. If your assignment or job away from home in a single location is realistically expected to last for more than 1 year, it is indefinite, whether or not it actually lasts for more than 1 year.

Employment that is initially temporary may become indefinite due to changed circumstances.

Federal crime investigation and prosecution. If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. This means that you may be able to deduct travel expenses even if you are away from your tax home for more than one year.

To qualify, the Attorney General must certify that you are traveling:

1. For the federal government,
2. In a temporary duty status, and
3. To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime.

Local transportation expenses. Local transportation expenses are the expenses of getting from one workplace to another when you are not traveling away from home. They include the cost of transportation by air, rail, bus, taxi, and the cost of using your car.

Work at two places in a day. If you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other.

Temporary workplace. You can deduct expenses incurred in going between your home and a temporary workplace if at least one of the following applies.

1. The workplace is outside the metropolitan area where you live and normally work.
2. You have at least one regular workplace (other than your home) for the same trade or business. (If this applies, the distance between your home and the temporary workplace does not matter.)

For this purpose, a workplace is generally considered temporary if your work there is realistically expected to last (and does in fact last) for 1 year or less. It is not temporary if your work there is realistically expected to last for more than 1 year, even if it actually lasts for 1 year or less. If your work there initially is realistically expected to last for 1 year or less, but later is realistically expected to last for more than 1 year, the workplace is generally considered temporary until the date your realistic expectation changes and not temporary after that date. 

This definition of a temporary workplace is the result of a change made in February 1999. Under the former definition, "temporary" meant irregular or short term (generally a matter of days or weeks). Because of this change, expenses that were considered nondeductible commuting expenses when you filed prior-year tax returns may now be deductible.

Home office. You can deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business. (In this situation, whether the other workplace is temporary or regular and its distance from your home do not matter.) See Home Office, earlier, for a discussion on the use of your home as your principal place of business.

Meals and entertainment. Generally, you can deduct entertainment expenses (including entertainment-related meals) only if they are directly related to the active conduct of your trade or business. However, the expense only needs to be associated with the active conduct of your trade or business if it directly precedes or follows a substantial and bona fide business-related discussion.

You can deduct only 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions. You apply this 50% limit before you apply the 2%-of-adjusted-gross-income limit.

Meals when subject to "hours of service" limits. You can deduct 55% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's "hours of service" limits. You apply this 55% limit before you apply the 2%-of-adjusted-gross-income limit.

This limit is 60% for 2000 and 2001, and it gradually increases to 80% by 2008.

Gift expenses. You can generally deduct up to $25 of business gifts you give to any one individual during the year. The following items do not count toward the $25 limit.

You can deduct dues and initiation fees you pay for union membership.

You can also deduct assessments for benefit payments to unemployed union members. However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Also, you cannot deduct contributions to a pension fund even if the union requires you to make the contributions.

You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. See Lobbying Expenses under Nondeductible Expenses, later.

You can deduct the cost and upkeep of work clothes if the following two requirements are met.

1. You must wear them as a condition of your employment.
2. The clothes are not suitable for everyday wear.

It is not enough that you wear distinctive clothing. The clothing must be specifically required by your employer. Nor is it enough that you do not, in fact, wear your work clothes away from work. The clothing must not be suitable for taking the place of your regular clothing.

Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc.).

Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear.

However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible.

Protective clothing. You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves.

Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers.

Military uniforms. You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses.

If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive.

If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. However, you can deduct the cost of insignia, shoulder boards, and related items.

You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school.

You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. These are expenses you pay:

1. To produce or collect income that must be included in your gross income,
2. To manage, conserve, or maintain property held for producing such income, or
3. To determine, contest, pay, or claim a refund of any tax.

You can deduct other expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes.

These other expenses include:

If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses, later, under Nondeductible Expenses.

You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property.

You can deduct casualty and theft losses on property used in performing services as an employee from Form 4684, Casualties and Thefts, lines 32 and 38b, or Form 4797, Sales of Business Property, line 18b(1). For casualty and theft losses on income-producing property, see Certain Casualty and Theft Losses, under Deductions Not Subject to the 2% Limit, later.

You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them.

You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. But if you work as an employee and also use the computer in that work, see Depreciation on Computers or Cellular Telephones under Unreimbursed Employee Expenses, earlier.

If the total deductions in the estate's last tax year are more than the estate's gross income for that year, the beneficiaries succeeding to the estate's property can claim the excess as a miscellaneous deduction. Do not include deductions for personal exemption and charitable contributions when figuring the total deductions. The beneficiaries can claim the deduction only for the tax year in which or with which the estate terminates, whether the year of termination is a normal year or a short tax year.

You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. You must add the fee to the cost of the property.

You cannot deduct the fee you pay to a broker to sell securities. You can use the fee only to figure gain or loss from the sale. See the instructions for columns (d) and (e) of Schedule D (Form 1040) for information on how to report the fee.

You can generally deduct hobby expenses, but only up to the amount of hobby income. A hobby is not a business because it is not carried on to make a profit.

Pass-through entities include partnerships, S corporations, and mutual funds. Deductions of pass-through entities are passed through to the partners or shareholders. If the deductions are miscellaneous itemized deductions, they are generally subject to the 2% limit.

Information returns. You should receive information returns from pass-through entities. Partnerships and S corporations issue Schedule K-1, which lists the items and amounts you must report, and identifies the tax return schedules and lines to use.

Example. You are a member of an investment club that is formed solely to invest in securities. The club is treated as a partnership. The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. You should receive a copy of Schedule K-1 (Form 1065).

Allocated expenses of mutual funds. The allocable investment expenses of nonpublicly offered mutual funds are subject to the 2% limit. Publicly offered mutual funds do not pass investment expenses through to shareholders.

A "publicly offered" mutual fund is one that is:

1. Continuously offered pursuant to a public offering,
2. Regularly traded on an established securities market, or
3. Held by or for at least 500 persons at all times during the tax year.

Contact your mutual fund if you are not sure if your fund is publicly offered.

Nonpublicly offered mutual funds. These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit.

Publicly offered mutual funds. These funds will send you a Form 1099-DIV, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). This net figure is the amount you report on your return.

You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income.

You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax.

You can also deduct legal expenses that are:

1. Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business,
2. For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or
3. To collect taxable alimony.

You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F) on the appropriate schedule. You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). See Tax Preparation Fees, later.

If you lose money you have on deposit in a qualified financial institution because of the insolvency or bankruptcy of the institution, how you treat your loss depends upon whether you can reasonably estimate its amount. If you can reasonably estimate the amount of your loss, see Treating your loss as an itemized deduction, next. If you cannot, or if you would simply prefer to wait until the year the loss is finally determined, see Treating your loss as a bad debt, later.

Treating your loss as an itemized deduction. If you can reasonably estimate the amount of your loss, you can claim it in the current year as:

1. A miscellaneous deduction subject to the 2% limit, or
2. A casualty loss.

Maximum amount you can claim as a miscellaneous deduction. If you can claim the loss as a miscellaneous deduction, the maximum amount you can claim for each financial institution is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds.

When you cannot claim the loss as a miscellaneous deduction. You cannot claim the loss as a miscellaneous deduction if:

1. Any part of the deposit is federally insured,
2. You own at least 1% of the financial institution,
3. You are an officer of the financial institution, or
4. You are related to such an owner or officer.

Final loss less than estimated loss. If the actual loss is less than the amount deducted as an estimated loss, you must include in income in the final determination year the excess loss claimed.

Treating your loss as a bad debt. If you cannot reasonably estimate the amount of your loss, or if you would just rather wait until the loss is finally determined, or if the actual loss that is finally determined is more than the amount you deducted as an estimated loss, you can claim the excess loss as a bad debt in the year the amount of your loss is finally determined.

How to report the loss. If you can claim the loss as a miscellaneous deduction, report it on Schedule A (Form 1040), line 22. It is subject to the 2%-of-adjusted-gross-income limit. Indicate the name of the financial institution on line 22, and write "Insolvent Financial Institution." Also attach a page showing how you calculated your estimated loss.

If you claim the loss as a casualty loss, report it on Form 4684 and Schedule A (Form 1040).

If you claim the loss as a nonbusiness bad debt, report it as a short-term capital loss on Schedule D (Form 1040). 

If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. If it is more than $3,000, see Repayments Under Claim of Right, later.

If the total of the amounts in box 5 (net benefits for 1999) of all your Forms SSA-1099, Social Security Benefit Statement, and Forms RRB-1099, Payments By the Railroad Retirement Board, is a negative figure (a figure in parentheses), you may be able to take a miscellaneous deduction. The amount you can deduct is the part of the negative figure that represents an amount you included in gross income in an earlier year.

The amount in box 5 of Form SSA-1099 or RRB-1099 is the net amount of your benefits for the year. It will be a negative figure if the amount of benefits you repaid in 1999 (box 4) is more than the gross amount of benefits paid to you in 1999 (box 3).

If the deduction is more than $3,000, you will have to use a special computation to figure your tax.

You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities.

You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. These service charges include payments for:

1. Holding shares acquired through a plan,
2. Collecting and reinvesting cash dividends, and
3. Keeping individual records and providing detailed statements of accounts.

You can usually deduct tax preparation fees in the year you pay them. Thus, on your 1999 return, you can deduct fees paid in 1999 for preparing your 1998 return. These fees include the cost of tax preparation software programs and tax publications. They also include any fee you paid for electronic filing of your return.

Deduct expenses of preparing tax schedules relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F) on the appropriate schedule. Deduct expenses of preparing the remainder of the return on line 21, Schedule A (Form 1040).

Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are deductible (if they are ordinary and necessary). They are deductible as a miscellaneous deduction on Schedule A (Form 1040). Arrangements (IRAs), for more information.