What Happened to My Unreimbursed Employee Expenses? The Elimination of the Miscellaneous Itemized Deductions

February 25, 2019

 

The 2018 tax season is upon us and we are now living in the midst of tax reform. As taxpayers, we are now realizing that some of our old and familiar itemized deductions have been modified or have gone away entirely. One of the casualties of the Tax Cuts and Jobs Act were miscellaneous itemized deductions.
 

What are miscellaneous itemized deductions?

 

Miscellaneous itemized deductions were available to those taxpayers who claimed itemized deductions instead of the standard deductions. They included certain items such as; unreimbursed employee expenses, tax preparation fees, and legal fees. Traditionally they were deductible if they exceeded 2% of the taxpayer’s adjusted gross income (AGI). These deductions were not highly publicized during the tax reform debate because they were not the type of deductions that were heavily utilized by taxpayers.
 

Unreimbursed Employee Expenses

 

The most utilized of the miscellaneous itemized deductions was probably the deduction for unreimbursed employee expenses. Such expenses include; professional dues, unreimbursed mileage, and business liability premiums. However, unreimbursed employee expenses have not gone away entirely. There are still certain categories of employment that will allow a taxpayer to claim a deduction for unreimbursed employee expenses. Those categories include; armed forces reservists, qualified performing artist, fee basis state and local government officials, and employees with impairment-related work expenses.
 

The unreimbursed employee expenses for taxpayers in the employment categories above have always been available as adjustments to gross income. This means that these unreimbursed employee expenses are used to calculate a taxpayer’s AGI. In order to deduct the expenses, they must be: paid or incurred during the tax year; for carrying on the trade or business of being an employee; and, ordinary and necessary for the taxpayer’s employment.
 

For the rest of us, we have no such luck. Fortunately, the Tax Cuts and Jobs Act increased the standard deduction to compensate for the loss. For more information please visit our website or contact us.

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