Unreimbursed Employee Expenses are NO LONGER Deductible in 2018
In the past, employees often deducted miscellaneous work-related expenses if the total exceeded two percent of their adjusted gross income (AGI). Expenses included unreimbursed travel and mileage. However, in 2018 wide range of employee work-related expenses are no longer deductible. In fact, many tax filers may not itemize deductions at all since the standard individual deduction has been increased to $12,000 ($24,000 for married couples). This change in the tax law is scheduled to last until 2026.
For the most part, employees cannot deduct unreimbursed travel expenses. However, self-employed individuals and businesses can still deduct travel expenses. You will also not be able to deduct moving expenses, and if your company pays for you to relocate, you’ll need to claim reimbursed moving costs as taxable income.
Remember, commuting costs were not previously and are still not deductible. Individuals may be able to claim some expenses if they need to travel to a temporary work location for a limited amount of time and expenses related to traveling between multiple job sites. If you qualify for this deduction, you need to include the latest Form 2106 with your return.
Other tax deductions going away in 2018
When filing for the 2018 tax year, you will no longer be able to deduct:
- Tax preparation fees
- Personal exemptions
- Unrestricted home equity loan interest
- Casualty and theft losses (except in disaster areas)
- Employers will no longer be able to deduct parking and transit costs
- Job expenses such as license and regulatory fees
- Employees will not be able to deduct expenses such as tools, scrubs, or classroom supplies (over $250)
- Home office costs
- Work-related legal fees
- Medical examinations required by an employer
- Alimony if divorced after December 31, 2018
What can I do to improve my tax situation?
Consider one of three options. Consult your Tax Professional to see if these strategies will work for you depends on your situation, but they are worth considering.
- Talk to your employer about a company reimbursement plan where the company absorbs your costs as legitimate business expenses.
- Ask your employer for a raise to cover your out-of-pocket costs. Your wages are a business expense to the company as well.
- Consider becoming a freelance or independent contractor so you can claim the expenses yourself. Talk to your CPA about how this affects your tax situation.
- Start your own business.
Since many new tax law changes favor businesses, now may be a good time to start your own business. If you have any aspirations to do so, now is a good time to start. Contact Stokes & Messier LLC, Certified Public Accountants, to help get you started and all along the way.