TL;DR (Too Long; Didn't Read)
The union dues deduction is an itemized deduction that was available in 2017.
2018 has been a particularly eventful year in the tax world. Some 2017 tax write-offs changed dramatically, and some disappeared entirely with a flip of the calendar page on Jan. 1. The union dues deduction was one of those that was eliminated.
The Union Dues Deduction
The union dues deduction was alive and well through the end of the 2017 tax year. It allowed you to deduct what you spent on union dues – along with other job-related expenses – if you itemized your deductions on your tax return rather than take the standard deduction.
But this was a miscellaneous itemized deduction, so it came with a restriction. You could only deduct the portion of what you spent that exceeded 2 percent of your adjusted gross income. You can find your AGI on line 37 of your 2017 Form 1040. Your AGI isn’t necessarily your total income for the year. It’s what’s left after making certain allowable deductions.
The 2-percent rule means that if your AGI was $60,000, you must subtract 2 percent of that amount, or $1,200, from what you spent on work-related expenses. If you spent $1,500 on union dues and that was your only work-related expense, you would be entitled to a $300 deduction. If you spent less than $1,200, you would not be entitled to claim the deduction at all.
But there’s another catch, and this one works in your favor. This miscellaneous deduction category covered a lot of other work-related expenses as well, not just dues. It included things like tools, supplies and uniforms. The 2-percent rule applied to the total so if you had $3,000 in overall qualifying work-related expenses, including union dues, you’d get a $1,800 deduction based on an AGI of $60,000.
You would have to file Schedule A with your tax return to claim any itemized tax deductions.
Exceptions to the Union Dues Deduction
Most tax laws come with a fair number of exceptions and the union dues deduction was no different.
Miscellaneous work-related deductions do not include expenses that were reimbursed to you by your employer. If you happen to have a great boss who paid those dues on your behalf or paid you back for what you spent on them, you’re out of luck. This makes the expenses non-deductible.
These expenses must also be considered “ordinary and necessary” by Internal Revenue Service standards. Most other people in your profession also incur these expenses, and they enabled or allowed you to do your job. Union dues would qualify under this rule.
Exactly what kind of payments you made to your union could affect your ability to deduct certain costs as well. Payments that were attributable to accident, sickness or death benefits were not deductible, nor were they contributions you made to a union pension fund or to political activities your union might be involved in.
2018 Tax Law Changes
Now that you know what you can deduct and how to deduct it, here’s the bad news: You can’t do it in 2018 due to the Tax Cuts and Jobs Act which took effect on January 1. The TCJA remains in effect through the end of 2025. It’s possible that the union dues deduction can come back in 2026 – unless Congress acts to renew the TCJA.
Until then, there might still be some hope. Senator Robert P. Casey, Jr. (D-Pa) introduced the Tax Fairness for Workers Act in Congress on April 19, 2018. The bill proposes to not only reinstate the union dues deduction and other miscellaneous deductions but to make it even better as well. If passed, the bill would make these “above-the-line” adjustments to income so you would no longer have to itemize your deductions to claim them. They would come off your overall income on page 1 of Form 1040 to arrive at your adjusted gross income, and you could claim the standard deduction for your filing status as well. No need to complete and submit Schedule A with your tax return.
The Tax Fairness for Workers Act has been referred to the Committee on Finance. It must next pass the Senate, then the House of Representatives before it can go to the President to be signed into law.
Tax Deductions in 2017 – The Bottom Line
If you haven’t yet filed your 2017 tax return yet because you requested an extension from the IRS, you can still go ahead and claim the union dues deduction according to the existing rules on that return. The change applies to expenses for union dues that are incurred and paid in 2018, and it affects the tax return you would file after year’s end in 2019.
You can also go back and amend your 2017 tax return in 2018 to claim this deduction if you didn't do so when you filed your original 2017 return.
- Forbes: Tax Bill Would Bring Back Deduction for Union Dues, Mileage & Other Job Expenses
- IRS: Law Change Affects Moving, Mileage and Travel Expenses
- New York Law Journal: Deductions Missing From Your 2018 Federal Tax Return
- IRS: Publication 529 – Miscellaneous Deductions
- Congress.gov: S.2718 Tax Fairness for Workers Act
- IRS: Form 1040
Beverly Bird has worked as a paralegal in the areas of personal finance and bankruptcy for over 20 years. She has been writing professionally for over 30 years.