Are Union Dues Check-Offs Tax Deductible?
With a few significant exceptions, any costs incurred in the process of earning money such as the cost of taking a client to lunch, the cost of using your personal vehicle for company work, using your personal tools on the job as well as dues and certain payments to unions or other professional organizations, can be deducted from your income for tax purposes. Not all payments to the union are deductible, though, and recent tax reforms have further complicated matters.
For tax years 2017 and prior, you are able to deduct your union dues check-offs as unreimbursed employee expenses on your tax return.
Union Dues Check-Off
Union dues payable is a liability account credited with the deductions made from a union members' wage through a system traditionally called check-off. When dues check-off is not a provision of the union contract, members pay their dues and other fees directly to the union. Regardless of how union dues are paid, and regardless of whether the work site is in a right-to-work state or not, the dues, as well as initiation fees, are deductible from the union member’s annual income taxes for tax years up to, and including 2017. However, taxpayers will find themselves unable to write off union dues check-off for tax years 2018 through 2025 as a result of recent tax reforms.
Amounts paid to the union for any form of insurance or pension, even if mandatory, are not deductible. Likewise, amounts paid to the union to support political activities, such as lobbying or political campaigning, are not deductible. These amounts are usually clearly differentiated on receipts and statements.
You must itemize deductions on Schedule A of Form 1040 – you cannot claim the union dues deduction on either Forms 1040A or 1040EZ. In addition, union dues fall under a category of deductions called Job Expenses and Certain Miscellaneous Deductions, which are listed on a separate form, Form 2106, with that total transferred to Schedule A. The total amount of these expenses – union dues and initiation fees, protective clothing, special uniforms, tools used in your work, unreimbursed travel and transportation costs except commuting, job search expenses and a host of others that can be found in IRS Publication 535, Business Expenses – must exceed 2 percent of your adjusted gross income, and only the amount that exceeds 2 percent of your AGI actually gets deducted.
Claiming the Deduction
To claim the union dues tax deductions for 2017 and prior tax years, you must itemize your expenses on Form 1040, Schedule A. Find your annual union dues payment amount either from the W-2 form your employer sends you, the last pay stub of the year, which will show the year-to-date amount or your own checkbook. For instance, to determine your 2017 tax write offs, you would use your last pay stub of 2016. Enter this on line 3 of Form 2106, Employee Business Expenses. Use this form to list other unreimbursed business expenses and complete it, transferring the amount on line 10 to line 21 of Schedule A.
- IRS: About Publication 529, Miscellaneous Deductions
- IRS: About Publication 17 (2018), Your Federal Income Tax (For Individuals)
- Forbes: What Your Itemized Deductions On Schedule A Will Look Like After Tax Reform
- IRS: About Publication 535, Business Expenses
- IRS: Form 2106, Employee Business Expenses
Dale Marshall began writing for Internet clients in 2009. He specializes in topics related to the areas in which he worked for more than three decades, including finance, insurance, labor relations and human resources. Marshall earned a Bachelor of Arts in communication from the University of Connecticut.