The employment agency said that they would waive the non-compete clause in their contract if she paid $30,000.. Where do we add the $30,000 paid, in our tax return?

Forum|Forum|2 years ago
January 14, 2024
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My wife was an employee of an employment agency working as a contractor for a third-party company. The third-party company wanted to employ her full-time. The employment agency said that they would waive the non-compete clause in their contract if she paid $30,000. We paid that amount over a period of five payments. Where do we add the $30,000 paid, in our tax return?

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PercyPenguin

Level 2

Sorry to be the bearer of bad news, but this isn't deductible (on your Federal Return for certain).

The TCJA eliminated business expenses for W2 employees.

Some states do still allow deductions for these types of expenses, so you may be able to deduct in on your state return. However, you'd only be able to deduct the amount paid in 2023 on your 2023 return (not the whole amount).

xmasbaby0

Level 15

Can I deduct job-related expenses on my tax return?

Sorry---W-2 employees cannot deduct job-related expenses on a federal return. Job-related expenses were eliminated as a federal deduction for W-2 employees by the tax laws that changed for 2018 and beyond. Your state tax laws might be different in AL, AR, CA, HI, MN, NY or PA.

If you live in a state that lets you deduct job-related expenses, the information will flow from your federal return to the state return, so enter it in Federal>Deductions and Credits>Employment Expenses>Job-Related Expenses

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-reform

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**