April 5, 2017
Tax tips for UFCW Members
The following article is presented for informational purposes only. If you have tax questions, please consult with a qualified tax professional.
It’s that time of year again. If you are one of the roughly one-third of Americans who wait until the last two weeks to file your taxes, don’t let the impending deadline cause you to rush and miss out on cash back you are owed.
Should You Itemize? Maybe.
In many cases, it is fine to go with the standard deduction, but set aside some time to make sure you aren’t missing out. Go through all of your possible deductions, especially if you are a homeowner with a mortgage or had substantial medical or school-related expenses the previous year. You can also deduct state and local taxes, which can make a big difference, especially if you live in an area with higher than average income tax rates.
UFCW Membership is Tax Deductible
Your membership contributions to the UFCW are tax deductible. The IRS categorizes “union dues” and “initiation fees” under miscellaneous itemized deductions on Schedule A (Form 1040), line 21.
Be careful not to confuse your pension contributions with your membership, because pension contributions are not tax deductible. Also, if you have chosen to be an Active Ballot Club (ABC) member, those donations are separate from your membership and go to a special fund for the UFCW’s political advocacy and to passing pro-worker legislation. Not all UFCW members choose to donate to ABC. Those kinds of political activities are not considered tax deductible by the IRS, unlike other non-political donations to charities the UFCW supports like the Leukemia and Lymphoma Society or Faces of Our Children.
The 2% Rule
You can only deduct the amount of combined miscellaneous expenses that exceeds 2% of your adjusted gross income (AGI). That means if you want to deduct your dues, you probably need to take a look at any other miscellaneous expenses you might have. A good first place to look is if you had any work-related expenses in 2016 that were not reimbursed by your employer.
Miscellaneous expenses that might count towards the 2% rule include:
- Job search expenses, even if you didn’t necessarily get the job.
- Work Clothes and Uniforms.
You can deduct the cost and upkeep of work clothes if the following two requirements are met:
- You must wear them as a condition of your employment.
- The clothes aren’t suitable for everyday wear.
- 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.
- Repayment of Income Aid Payment
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.
- Tools Used in Your Work
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. For more information about depreciation, see IRS Publication 946.
- Tax Preparation Fees that you paid during 2016, even it they were for an earlier tax year.
You can find a full list of eligible miscellaneous itemized deductions in IRS Publication 529 on the IRS website.
For example, if your adjusted gross income in 2016 was $40,000 and your combined miscellaneous expenses totaled $1,300, you can deduct $500 of that, because the other $800 equals 2% of $40,000.
Take Full Advantage of Credits and Tax Breaks
Did you know that only about 20% of those who qualify for the Earned Income Tax Credit actual claim it? That’s a big deal given that it can be worth up to $6,242 for those who qualify. Check out this list from CNBC of the ten most popular tax credits to see if there’s one you may qualify for.
And don’t forget if you have already filed your taxes and forgot to take deductions or credits you should have, you can still file an amendment as long as it’s within the past three years.