Deductions Not Subject to the 2% Limit You can deduct the expenses listed below as miscellaneous itemizeddeductions. They are not subject to the 2% limit. Report theseexpenses on line 27, Schedule A (Form 1040). List of Deductions Amortizable premium on taxable bonds Casualty and theft losses from income-producingproperty Federal estate tax on income in respect of a decedent Gambling losses up to the amount of gambling winnings Impairment-related work expenses of persons withdisabilities Repayments of more than $3,000 under a claim of right Unrecovered investment in a pension Amortizable Premiumon Taxable Bonds In general, if the amount you pay for a bond is greater than itsstated principal amount, the excess is bond premium. You can elect toamortize the premium on taxable bonds. The amortization of the premiumis generally an offset to interest income on the bond rather than aseparate deduction item. ERROR MSGDeduction for excess premium.On certain bonds (such as bonds that pay a variable rate ofinterest or that provide for an interest-free period), the amount ofbond premium allocable to a period may exceed the amount of statedinterest allocable to the period. If this occurs, treat the excess asa miscellaneous itemized deduction that is not subject to the2-percent floor. However, the amount deductible is limited to theamount by which your total interest inclusions on the bond in priorperiods exceed the total amount you treated as a bond premiumdeduction on the bond in prior periods. If any of the excess bondpremium cannot be deducted because of the limit, this amount iscarried forward to the next period and is treated as bond premiumallocable to that period. Pre-1998 election to amortize bond premium.Generally, if you first elected to amortize bond premium before1998, the above treatment of the premium does not apply to bonds youacquired before 1998. Bond acquired before October 23, 1986.The amortization of the premium is a miscellaneous itemizeddeduction not subject to the 2% limit. Bond acquired after October 22, 1986, and before 1988.The amortization of the premium is investment interest expensesubject to the investment interest limit, unless you choose to treatit as an offset to interest income on the bond. More information.For more information on bond premium, see Bond PremiumAmortization discount hotels in Birminghamin chapter 3 of Publication 550. Certain Casualty and Theft Losses You can deduct casualty and theft losses on income-producingproperty from Form 4684, lines 32 and 38b, or Form 4797, line 18b(1).For casualty and theft losses on property used in performing servicesas an employee, see Certain Casualty and Theft Losses,under Other Expenses, earlier. For other casualty andtheft losses, see Publication 547. Federal Estate Tax on Incomein Respect of a Decedent You can deduct the federal estate tax attributable to income inrespect of a decedent that you as a beneficiary include in your grossincome. Income in respect of the decedent is gross income that thedecedent would have received had death not occurred and that was notproperly includible in the decedent's final income tax return. GetPublication 559, for information about figuring the amount of thisdeduction. Gambling Losses Up to theAmount of Gambling Winnings You must report the full amount of your gambling winnings on line21, Form 1040. You deduct your gambling losses on line 27, Schedule A(Form 1040). You cannot deduct gambling losses that are more than yourwinnings. Only gambling losses incurred during the year can bededucted on Schedule A (Form 1040). Caution: You cannot reduce your gambling winnings by your gambling lossesand report the difference. You must report the full amount of yourwinnings as income and claim your losses (up to the amount ofwinnings) as an itemized deduction. Therefore, your records shouldshow your winnings separately from your losses. Files: alberghi a PisaDiary of winnings and losses. You must keep an accuratediary or similar record of your losses and winnings. Your diary should contain at least the following information. The date and type of your specific wager or wageringactivity. The name and address or location of the gamblingestablishment. The names of other persons present with you at the gamblingestablishment. hotel de luxe a bas prix MamaiaThe amount(s) you won or lost. Proof of winnings and losses.In addition to your diary, you should also have otherdocumentation. You can generally prove your winnings and lossesthrough Form W-2G, Certain Gambling Winnings, Form5754, Statement by Person(s) Receiving Gambling Winnings,wagering tickets, canceled checks, credit records, bankwithdrawals, and statements of actual winnings or payment slipsprovided to you by the gambling establishment. For specific wagering transactions, you can use the following itemsto support your winnings and losses. Keno: Copies of the keno tickets you purchasedthat were validated by the gambling establishment, copies of yourcasino credit records, and copies of your casino check cashingrecords. Slot machines: A record of the machine number andall winnings by date and time the machine was played. Table games (twentyone (blackjack), craps, poker,baccarat, roulette, wheel of fortune, etc.): The number of the tableat which you were playing. Casino credit card data indicating whetherthe credit was issued in the pit or at the cashier's cage. Bingo: A record of the number of games played,cost of tickets purchased, and amounts collected on winning tickets.Supplemental records include any receipts from the casino, parlor,etc. Racing (horse, harness, dog, etc.): A record ofthe races, amounts of wagers, amounts collected on winning tickets,and amounts lost on losing tickets. Supplemental records includeunredeemed tickets and payment records from the racetrack. Lotteries: A record of ticket purchases, dates,winnings, and losses. Supplemental records include unredeemed tickets,payment slips, and winnings statements. Caution: These recordkeeping suggestions are intended as general guidelinesto help you establish your winnings and losses. They are notall-inclusive. Your tax liability depends on your particular facts andcircumstances. Impairment-Related Work Expenses If you have a physical or mental disability that limits your beingemployed, or substantially limits one or more of your major lifeactivities, such as performing manual tasks, walking, speaking,breathing, learning, and working, you can deduct yourimpairment-related work expenses. Impairment-related work expenses are ordinary and necessarybusiness expenses for attendant care services at your place of workand other expenses in connection with your place of work that arenecessary for you to be able to work. Where to report.If you are an employee, you enter impairment-related work expenseson Form 2106 or 2106-EZ. Enter on line 27, Schedule A (Form1040) that part of the amount on line 10 of Form 2106, or line 6 ofForm 2106-EZ, that is related to your impairment. Enter theamount that is unrelated to your impairment on line 20, Schedule A(Form 1040). Repayments Under Claim of Right If you had to repay more than $3,000 that you included in yourincome in an earlier year because at the time you thought you had anunrestricted right to it, you may be able to deduct the amount yourepaid, or take a credit against your tax. See Repaymentsin Publication 525 for more information. Unrecovered Investment in Pension If a retiree had contributed to the cost of a pension or annuity,the retiree can exclude from income a part of each payment received asa tax-free return of the retiree's investment. If the retiree diesbefore the entire investment is recovered, any unrecovered investmentcan be deducted on the retiree's final income tax return. GetPublication 575, Pension and Annuity Income, for moreinformation about the tax treatment of pensions and annuities. Performing Artists If you are a performing artist, you may qualify to deduct youremployee business expenses as an adjustment to income rather than as amiscellaneous itemized deduction. To qualify to deduct your expensesas an adjustment to income, you must meet all three of the followingrequirements. You perform services in the performing arts for at least twoemployers during your tax year. (You are considered to have performedservices in the performing arts for an employer only if that employerpaid you $200 or more.) Your related performing-arts business expenses are more than10% of your gross income from the performance of such services. Your adjusted gross income is not more than $16,000 beforededucting these business expenses. If you do not meet all of the above requirements, you do notqualify to deduct your expenses as an adjustment to gross income andthe expenses are subject to the 2% limit. Special rules for married persons.If you are married, you must file a joint return unless you livedapart from your spouse at all times during the tax year. If you file a joint return, you must figure requirements (1) and(2) separately for both you and your spouse. However, requirement (3)applies to your and your spouse's combined adjusted gross income. Where to report.If you meet all of the above requirements, you should firstcomplete Form 2106 or Form 2106-EZ. Then you include yourperforming-arts related expenses from line 10 of Form 2106 or fromline 6 of Form 2106-EZ on line 32 of Form 1040. Then write"QPA" and the amount of your performing-arts related expenses onthe dotted line next to line 32 (Form 1040). Officials Paid on a Fee Basis If you are a fee-basis official, you can claim your expenses inperforming services in that job as an adjustment to income rather thanas a miscellaneous itemized deduction. To qualify as a fee-basisofficial, you must be employed by a state or local government and bepaid in whole or in part on a fee basis. Where to report.If you qualify as a fee-basis official, you should first completeForm 2106 or Form 2106-EZ. Then you include your expenses inperforming services in that job from line 10 of Form 2106 or from line6 of Form 2106-EZ on line 32 of Form 1040. Then write "FBO"and the amount of those expenses on the dotted line next to line 32(Form 1040).