The Tax Cuts and Jobs Act (TCJA) included many taxpayer-friendly changes, such as lower tax rates overall, and a much larger standard deduction for individuals. However, not all of the changes made by the TCJA are good news. For example, the TCJA has suspended the ability of taxpayers to take a deduction for certain expenses classified as “miscellaneous itemized deductions” for tax years beginning in 2018 through 2025. Examples of such expenses for employees include the following:
- Lodging;
- Meals and entertainment;
- Required medical exams;
- Subscriptions to professional journals;
- Union or professional dues;
- Job hunting expenses;
- Business use of a home; and
- Depreciation on a home computer.
Additional expense items considered as miscellaneous itemized deductions include:
- Investment fees;
- Separately paid custodian fees for an IRA; and
- Tax preparation fees.
For taxpayers that take advantage of these deductions, 2018 may be a rough tax year. However, there may be options available to restructure your tax situation in order to preserve the deductibility of these expenses. In addition, it may even be possible for us to work with your employer so that you can be reimbursed for certain expenses without your overall financial results being adversely affected. This year, tax planning will be very important so that you can take advantage of the good aspects of tax reform and to be prepared for some of the bad aspects of tax reform.