Floored by taxes

Q What’s the “2 percent floor” in tax talk? — K.G., Fort Myers, Florida

A

It refers to miscellaneous itemized deductions. You can deduct only the portion of them that exceeds 2 percent of your adjusted gross income (AGI). For example, if your AGI is $50,000, your floor will be 2 percent of that, or $1,000. If your miscellaneous itemized deductions total $900, you’re out of luck. But if they total $1,750, you can deduct $750.

Qualifying expenses include certain home office expenses, tax preparation fees, investment-related fees, job-hunting expenses and unreimbursed job-related expenses. Unfortunately, the recent tax reform suspends these miscellaneous itemized deductions beginning with the 2018 tax year through 2025. So enjoy them this year!

Learn more in our tax nook at fool.com/taxes and from the horse’s mouth, at irs.gov.

Q Whenever I buy stock, do I have to buy 100 shares or more? — E.J., Detroit

A

Nope. Most brokerages don’t restrict how many shares of stock you can buy. You can buy 16 shares or 87 shares or even just one share. Pay attention to what percentage of your investment is going to commissions, though.

If, for example, you buy 10 shares of a $25 stock for $250, but you pay a $15 commission to your broker, then that represents 6 percent of your investment, which is rather costly. (15 divided by 250 is 0.06, or 6 percent.) Your investment would have to grow by 6 percent before you’d break even — and that might take a while.

Aim to pay 2 percent or less in commissions. If you buy $1,000 of stock in a company and pay a $15 commission, that’s less than 2 percent. Many brokerages these days charge commissions of $10 or less per trade.