1040 Line 24 – Reservists, Performing Artists, etc.

(This is part of a series looking at various common 1040 questions. To go back to the summary page, click here)

Sometimes tax law is confusing on its own, and sometimes the IRS makes it confusing by jamming too much information into one line. 1040 Line 24 qualifies for the latter treatment, with so much information that the IRS had to use a smaller font size just to get it to fit on the form.

And even with the smaller font it still takes up two lines

And it still had to use two lines

The information requested in 1040 Line 24 is only related in that you’ll have to fill out another form to give the IRS what they want. Unfortunately, if you head over to requested Form 2106, the information doesn’t exactly become clear.

Let me take a brief step back to try to make sense of it all. If you’re self employed, or receive 1099s from an employer rather than a W-2, you’re technically running your own business and should file as such. If that’s the case, you can find help with your taxes here. If, however, you are an employee, paid with W-2 wages, and you still have to pay for some business expenses on your own, you can potentially deduct these amounts.

Example time: You’re an insurance adjuster getting paid with W-2 wages. Your employer requires you to drive all over the state figuring out claims, but is too cheap to pay for your car or any other travel expenses. These expenses are legitimate business expenses. You’d fill these out on Form 2106, and then could possibly itemize them as a deduction on your Schedule A.

Schedule A deductions, however, are only available if you reach a certain amount of expenses related to your income. I’ll be discussing these more at a later date when I talk about Schedule A line 21. For most people filing taxes, this limitation means that they will never deduct business expenses flowing through the Schedule A.

Our always caring government decided that, in certain cases, they’d allow deductions of these employee business expenses on the 1040, which means these taxpayers can deduct the expenses even if they don’t meet the Schedule A requirements. The special cases are as follows:

Armed Forces reservist – If you are a member of a reserve component of the US Armed Forces,  you’ll fill out the Form 2106 for your reservist expenses. On line 10 of that form, though, you’ll break your total expenses out into two parts. Part 1 is expenses for travel more than 100 miles away from your home, which will be reported and deducted on your 1040 Line 24. The remainder would go on your Schedule A.

The instructions note that you are limited on your 1040 Line 24 expenses to the regular federal per diem rate and the standard mileage rate, plus any parking fees, ferry fees, and tolls.

Aerial Security

Pictured: guy flying over Afghanistan with a big gun. If this were a reservist, he could potentially deduct the expenses of this trip on 1040 Line 24.

Fee-basis state or local government official – I’m not 100% sure what this is, but if you are employed by a state or political subdivision and compensated at least partially on a fee basis, you’ll have to fill out the Form 2106, but the amount on line 10 will go on the 1040 Line 24 instead of on the Schedule A.

Qualified performing artist – This is by far the most confusing exception. To be allowed the 1040 Line 24 deduction instead of a Schedule A deduction, you must be a performing artist who worked as an employee for at least two employers during the tax year (meaning you were paid on a W-2 instead of a 1099 or scholarship, which I understand is extremely rare), you received at least $200 from each employer, had business expenses related to your performing art of at least 10% of your performing art gross income, and your total adjusted gross income for the year before deducting these expenses is less than $16,000.

If you’re married, all those requirements must be looked at on an individual basis, except the adjusted gross income of $16,000, which must be the total gross income of both of you combined.

This performing artists exception seems rather unhelpful to me. Besides the fact that performing arts employers rarely pay on a W-2 basis, the $16,000 gross income ceiling (this is with ALL your income, not just your performing arts income) is going to make this deduction extremely rare.

Anyway, if you are in one of these three situations above, you get a small additional deduction. While I suppose every little bit helps, these deductions, like the Educator Expenses I discussed last time, at best mean saving enough in taxes to upgrade one of your dates from McDonald’s to Smashburger (or Larkburger if you live in Denver).

 

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Picture from Expert Infantry