Union Dues and Retirement

[Gene V]

A taxpayer was retired in 2016, but he continued to pay union dues associated with his past job. Are the union dues that he paid in 2016 deductible on his 2016 Schedule A as a miscellaneous itemized deduction (subject to 2% of AGI), or is this no longer possible since he was retired?

You can take it out of context from Pub 529, and say it doesn't say you have to be working, just belong to a union

Union Dues and Expenses Page 7
You can deduct dues and initiation fees you pay for union
membership.

[taxea]

In this particular case, the amount does exceed the 2% of AGI, and it does make a noticeable difference in regards to the taxpayer's bottom line on the tax return if I enter in these union dues. The taxpayer did receive benefits because of paying these union dues despite the fact that he was retired. Should I put the union dues that he paid in 2016 on his tax return? It appears that I'm getting different answers in response to my question, and it is confusing me. I'm still not sure what to do in regards to his tax return.

If he has to pay the dues after retirement in order to get the benefits then deduct the dues.

[Tax Sleuth]

My opinion after doing meticulous research is the union dues are not deductible. I realize that other practitioners might disagree with me. However, it clearly states in IRS Publication 529 that union dues is a deduction subject to the 2% limit and falls in the category of unreimbursed employee expenses. It also states, "You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, for carrying on your trade or business of being an employee, and ordinary and necessary." I do not believe that someone who is retired is carrying on a trade or business of being an employee. It would be different if a retired person started working again during the tax year in question, but that did not happen in this case.

[TAXNJ]

If he has to pay the dues after retirement in order to get the benefits then deduct the dues.

That could be helpful. Will you share what you are referencing?

Once you are vested and retired did not know that you had to continue to pay dues in order to get the benefits. Are there any retirement plans that require such?

[TAXNJ]

My opinion after doing meticulous research is the union dues are not deductible. I realize that other practitioners might disagree with me. However, it clearly states in IRS Publication 529 that union dues is a deduction subject to the 2% limit and falls in the category of unreimbursed employee expenses. It also states, "You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, for carrying on your trade or business of being an employee, and ordinary and necessary." I do not believe that someone who is retired is carrying on a trade or business of being an employee. It would be different if a retired person started working again during the tax year in question, but that did not happen in this case.

In addition to your research and other reply post references supporting your decision, you might also consider referencing which may provide support to your decision (if you have not already) the following:

26 U.S. Code § 162 Trade or business expense (a) IN GENERAL There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business,

Wilson v. Commissioner, T.C. Memo. 2001-301.Union dues, initiation fees, fines. (Dues and initial fees paid for union membership are deductible as unreimbursed employee expenses subject to the 2 percent floor on miscellaneous itemized deductions.)

[FEDUKE404]

Required union dues after retirement ?

That could be helpful. Will you share what you are referencing?

Once you are vested and retired did not know that you had to continue to pay dues in order to get the benefits. Are there any retirement plans that require such?

Actually, I had the same, exact question.

Seems like another reason that unions are generally . . .despised?? . . .in the local area.

FE

[Snaggletooth]

Here is a Straight Answer

Tax Sleuth, just deduct the union dues subject to the 2% floor.

I don't know how all these other factors mentioned changes the deductibility of union dues.

Union dues are not an "ordinary and necessary" business expense. Doesn't change a thing.
Union dues are not subject to continued employment. Doesn't change a thing.
Union dues are not a figment of anyone's imagination to construct "what ifs". Doesn't change a thing.

Deduct them, subject to the 2% floor.

[taxea]

That could be helpful. Will you share what you are referencing?

Once you are vested and retired did not know that you had to continue to pay dues in order to get the benefits. Are there any retirement plans that require such?

Best way to find out is to ask the client and his/her union