Barbara and Michael (wife and husband)are itemizing their Schedule A expenses on their tax year 2014 return.Michael traveled to Japan for his employer,but was not reimbursed.His meal expenses totaled $500.How much can Michael deduct for meals before applying the 2% of AGI limitation?
A)$500.
B)$250.
C)$150.
D)$0.

Question

Quizplus · Accepted Answer

According to IRS Publication 17, unreimbursed employee expenses, including travel expenses, are subject to a 2% limitation of adjusted gross income (AGI). This means that only expenses that exceed 2% of AGI are deductible.

In this case, we don't have information about Michael's AGI. However, we know that his meal expenses were $500. To calculate the deductible amount, we need to multiply this by the 50% limit for business meals (as per IRS Publication 463):

$500 x 50% = $250

This is the amount that Michael can deduct for his meals before applying the 2% limitation. If his AGI is, for example, $50,000, he can only deduct expenses that exceed $1,000 (which is 2% of $50,000). Therefore, he would be able to deduct $250 - $1,000 = $0. However, we don't have enough information to determine whether Michael can deduct any amount beyond the 2% limitation.

Barbara and Michael (Wife and Husband)are Itemizing Their Schedule a Expenses