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, or dues and certain other 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 the U.S. tax code imposes some restrictions.
Union Dues Check-Off
Most union members pay their dues through a system traditionally called check-off, in which the employer deducts the dues from members’ wages and gives them to the union. 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.
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 1040--EZ. 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 deduction, 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. 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.
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