Notably, the new Tax Cuts and Jobs Act (TCJA) scales back deductions for certain itemized deductions, including state and local tax (SALT) payments and mortgage interest. But another lesser-noticed crackdown may be just as significant. Effective for 2018 through 2025, the TCJA completely eliminates the Schedule A deduction for miscellaneous expenses. This change can be especially harmful to employees who pay job-related expenses out of their own pocket.
The repeal amounts to more than just mere chump change. Millions of taxpayers who have deducted miscellaneous expenses in the past won’t be entitled to a write-off on their 2018 returns. It’s another reason why more taxpayers will be claiming the increase standard deduction instead of itemizing. For the same time period, the TCJA essentially doubles the standard deduction to $12,000 for single filers and $24,000 for joint filers.
Under prior law, you could deduct the amount of your miscellaneous expenses exceeding 2% of your adjusted gross income (AGI) for the year. For instance, if you had an AGI of $100,000 and you incurred $3,000 in deductible miscellaneous during the year, you could write off $1,000.
Perhaps the biggest losers in this new scenario are employees who pay certain expenses without being reimbursed by their employers. This includes costs ranging from travel expenses for salespeople to tools for construction workers to scrub tops for nurses. It also applies to certain home office expenses, hobby losses, union dues and job-hunting expenses, just to name a few more.
Conversely, self-employed individuals generally don’t have to contend with this problem. They still may be able to deduct these expenses on Schedule C.
Read more here: http://bit.ly/2Fge3zr
Shared from: cpapracticeadvisor.com