Deductible Union Dues
The IRS allows members of a labor union to deduct union dues on their tax returns. However, the first thing to keep in mind is that in order to deduct union dues, you must elect to itemize deductions on Schedule A instead of claiming the standard deduction for your filing status. If you’re unsure whether you should be itemizing, simply compare your standard deduction to the total amount of expenses you’re eligible to deduct on Schedule A, including your deductible union dues.
For example, if you are a single taxpayer who is eligible for a $5,800 standard deduction, itemizing is only beneficial when the total on Schedule A is at least $5,800. Therefore, if you can take a mortgage interest deduction of $4,000 and a state income tax deduction of $2,800 and pay $400 of deductible union dues; the total on Schedule A (before taking a deduction for union dues) is equal to $6,800 – meaning you will save more in tax by itemizing and including part of your union dues on Schedule A.
Calculate Deductible Union Dues
Calculating the deductible amount of your labor union dues requires that you first assess what your union dues pay for. Your deduction includes 100% of the payments you make to join or maintain membership in a union, plus any additional dues you pay into a fund that provides unemployment benefits to members. You cannot, however, report any union due payments that provide sick, accident or death benefits to union members and their families on Schedule A. Moreover, the IRS doesn’t allow you to deduct the contributions you make to a union pension fund, regardless of whether the contributions are compulsory or not.
Schedule A: Job Expenses and Miscellaneous Deductions
Once you calculate the deductible amount of your union dues, you must report it on Schedule A in the “Job Expenses and Certain Miscellaneous Deductions” section. The first line of this section is the appropriate place to report your union dues since the IRS treats it as an unreimbursed employee expense. However, it’s important to understand that the total job expenses you report on Schedule A are subject to the 2-percent adjusted gross income, or AGI limitation. This means that your total “Job Expenses and Certain Miscellaneous Deductions” is only deductible to the extent it exceeds 2 percent of your AGI. For example, if the only eligible job expense you report is the $400 of union dues and your AGI is $20,000; none of your union dues are actually deductible since the amount doesn’t exceed $2,000 (2% of $20,000).
IRS Reference: Schedule A