Is it possible to deduct union dues on a tax return?
Members of unions commonly ask if it is possible to deduct union dues on their tax returns. 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.
Deducting Union Dues on Tax Return
Most union members pay their dues through a system traditionally called check-off, in which the employer deducts the dues from members’ wages and gives them to the union. When dues check-off is not a provision of the union contract, members pay their dues and other fees directly to the union. Regardless of how union dues are paid, and regardless of whether the work site is in a right-to-work state or not, the dues, as well as initiation fees, are deductible from the union member’s annual income taxes.
Deducting Union Dues as Unreimbursed Employee Expenses
Again, you can deduct dues and initiation fees you pay for union membership. These are entered as unreimbursed employee expenses on Line 21 of Schedule A (Form 1040) Itemized Deductions. Find your annual union dues payment amount either from the W-2 form your employer sends you, the last pay stub of the year, which will show the year-to-date amount or your own checkbook. Enter this on line 3 of Form 2106, Employee Business Expenses. Use this form to list other unreimbursed business expenses and complete it, transferring the amount on line 10 to line 21 of Schedule A.
Deduct assessments or benefit payments to unemployed union members.
You can also deduct assessments or benefit payments to unemployed union members. However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions.
Deducting Lobbying Expenses
You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. See Lobbying Expenses under Nondeductible Expenses, later. Lastly, it is advisable to first determine if a taxpayer is better of deducting union dues by electing to itemize their deduction or by just claiming the standard deduction.