One of the deductions that few people think about is the deduction for the expense of union dues. Union dues fall into the category of miscellaneous deductible expenses and are subject to limitations and specific rules regarding dues versus money paid to the union for lobbying the government and amounts paid in for pension funds. The effect on the overall tax return is a minimal one at best, but added along with other deductible amounts could make a difference in refund amounts.
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Things you need
- W-2s for all persons on the same return
- IRS Form 1040 and accompanying documentation
- The bottom line adjusted gross income for the current tax year
- A list of all itemised deductions you are planning to take
- A statement from the union on the amount of dues you paid
- IRS Publication 529
Calculate your adjusted gross income for the tax year. Gather all the W-2s for all persons on the return, and total the amounts found in the total wages, salaries and tips box. The bottom line number will be your adjusted gross income, which will transfer to the top box on the second page of the 1040.
Add each amount from your itemised deductions. If the amount for the itemised deductions is less than the standard deduction for the filing status you are claiming (this is found on page 2 of the 1040 in the left margin), you will not be able to claim miscellaneous itemised deductions including the cost for union dues.
Determine actual deductible part of the dues. Union expenses, including the following categories, i.e. lobbying the government for union benefits, pension contributions or contributions to provide benefits for sick, accident or death benefits, are not deductible. The only portion that is deductible are the dues themselves, regardless of whether the union requires payments from you for these other expenses.
Use the 2 per cent limitation rule. Take your adjusted gross income, and find 2 per cent of the amount. The deductible portion of the miscellaneous itemised deductions is the amount that is more than 2 per cent of the adjusted gross income. For more information on specifics of union dues deductions or other miscellaneous itemised deductions, consult IRS Publication 529.
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