TCJA changes work-related deductions

March 20, 2019
There are often costs associated with doing your job, but which ones can you deduct on your tax returns? The Tax Cuts and Jobs Act made some changes to work-related deductions that you should know about as you prepare to finalize your 2018 tax return this year. The Oklahoma Society of Certified Public Accountants provided an update and advice on steps you can take to minimize any added tax burden. 

Understand unreimbursed expenses.
Many organizations will cover expenses workers incur as part of their jobs, but some do not, or they only partially cover them. Before the new tax law took effect in 2018, you were able to deduct unreimbursed business expenses that exceeded 2 percent of your adjusted gross income. That included money spent on travel, transportation and entertainment, professional association dues, work-related education, uniforms, home office expenses and costs for seeking a new job, among other things. Beginning with the 2018 tax year--i.e., the return you are filing this year--those deductions are no longer available. 

What’s an employee to do? 
Be sure you understand your employer’s reimbursement policy and find out if your state requires employers to reimburse workers for work-related expenses and mileage. If your employer will reimburse your expenses, don’t forget to document and claim all your expenses so you get any available reimbursements. If a cost isn’t covered, track the money you spend and see if you can make a case to have your employer pay them because organizations can deduct them as business expenses. Be aware if work expenses push your net pay below the federal minimum wage, federal law mandates your employer cover those expenses. 

Figure costs of moving for a job.
You get your dream job, but you’re going to have to relocate as a result. In the past, you were eligible to deduct expenses for a move that was work-related and for a job that was at least 50 miles farther from your home than your current position. In addition, you had to work full time for no less than 39 weeks at the new location in the first year (longer for self-employed workers). Beginning with your 2018 return, those deductions are gone, although there are exceptions for those in the armed forces. With that in mind, it’s a good idea to inquire about any prospective employer’s policy on moving costs because the organization may reimburse you. If they don’t, you’ll have to factor the added costs into your decision to jump to a new position. Remember moving expenses aren’t the only potential cost to consider if you’re thinking of relocating for a job. You’ll want to know, for example, how the cost of buying or renting a home and property taxes will compare with prices in your current community and be aware of any potential differences in the overall cost of living. You should consider whether you’ll need new furniture in a new place or, if you’re downsizing, somewhere to store belongings that were better suited to a larger home. Many people quit their old jobs a little early so they can focus all their energy on a relocation, so add that lost income to your list of moving costs. Seeing what a relocation may cost can help you determine whether that new position is the best step for you. 

Have more questions about the impact of recent tax law changes or the best ways to minimize your tax bill? Your local CPA can offer guidance on all of your financial questions. In Oklahoma, you can get a free CPA referral and free 30-minuted consultation from www.FindYourCPA.com

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