A tax deduction reduces the amount of income you pay taxes on. The more you can reduce your taxable income, the less you’ll pay in taxes.
If you pay attention to tax deductions and tax credits, how they function, and how to get them, you can save significant money on your taxes.
There are a number of items you may spend money on that can qualify as tax deductions. For example, some tax deductible expenses may include student loans and some sales taxes.
But what about union dues? Are union dues tax deductible?
Below you’ll find the answer.
Are Union Dues Tax Deductible?
No, union dues are not tax deductible. At least not any longer. They used to be deductible, and it’s possible they will be deductible again in the future. Read on to get the scoop.
Unfortunately, employees cannot deduct union dues from their tax returns. But before 2018, an employee who paid union dues could have deducted them as unreimbursed employee business costs.
That is, if the total of the dues and certain itemized miscellaneous expenses exceeded a specified threshold. Basically, if the employee could itemize deductions, the employee then deducted their dues.
The government suspended this deduction for employee business costs for tax years 2018 through 2025. They did this through the Tax Cuts and Jobs Act (TCJA), which was passed into law through an effort of the Republicans in Congress at the time. This law, signed into law on December 22, 2017, prohibits most employees from deducting union dues on their federal tax returns for tax years 2018 through 2025.
There are, however, a few exceptions. If your union dues qualify under one of the exceptions stated below, you’re in luck.
Which Union Dues Are Tax Deductible?
If you’re self-employed, you can deduct union dues as a business cost. Union dues paid by a self-employed taxpayer are deducted as a business cost.
If your union dues meet the following criteria, you may be able to amend your tax return to include your union dues if you did not do so when you originally filed.
- Incurred in 2017 or earlier
- You itemized or were eligible to itemize your deductions on Schedule A in the tax year you are deducting your dues
- Your dues and other miscellaneous deductions (employee business expenses are/were considered a miscellaneous deduction) exceed 2 percent of your adjusted gross income
You may be allowed to deduct your unreimbursed employee business expenditures if you are a fee-based government official or a performing artist. If this is the case, the deduction is an adjustment to income rather than an itemized deduction.
How To Claim Your Deductions
You can claim deductions on Schedule C. These taxpayers are either sole owners or public servants. If you are a sole proprietor or statutory employee, you can deduct all of your regular and necessary business costs on Schedule C.
The job-related costs deduction is still available to individuals in the following occupations or situations:
- Armed Forces reservist
- You have a disability, and you have impairment-related expenses
Moreover, not all states comply fully with federal tax law. That means state employee business expenses may be deductible; if they are, you may deduct them on your state return even if they are not deductible on your federal return.
All in all, union dues are not tax-deductible to the average employee. You must meet several criteria to claim deductions on your union dues.