Tax Tip Tuesday 8: Job Expenses and Misc. Deductions

We will close out our review of itemized deductions with a review of Casualty and Theft Losses, Job Expenses and Miscellaneous Deductions.

The casualty and theft deduction was established to help lessen the financial impact of losses such as accidents, vandalism, and natural disasters. In 2018, only those losses attributable to a federal disaster, that has been declared by the President, are deductible.  The loss must exceed $100, and only the portion of the loss that exceeds 10% of your AGI can be deducted.

You may want to review your insurance deductibles since they are no longer allowable.

Job expenses and Miscellaneous Deductions have been totally eliminated as a category of itemized deductions for 2018 through 2025.  This change affects those who are compensated as employees but have work-related business expenses. If you are among the trendy work from home employees, all the tax benefits that accrued to you are no longer available.  Home office expenses you may have been able to deduct, such as a portion of your utilities and rent or mortgage, office supplies and computer cost, have all been eliminated. Other groups affected include salespeople with travel and entertainment expenses, long-haul truck drivers with away-from-home expenses, mechanics and construction workers with tool expenses, and any other employees with large but unreimbursed business expenses.

If you fall into this category there are a couple of remedies available to you.  One is to negotiate a reimbursement plan for your out of pocket expenses. You would need to substantiate your expenses and in case of an advance, you would return any excess.  Another avenue, if available, may be to have your employer reclassify you as an independent contractor. You would be responsible for your own taxes but retain the ability to write off your business expenses against your independent contractor income.  We will delve deeper into this option in a later post.

Once all the categories of itemized deductions are totaled, the deductibility of the total amount was subject to a phase-out, if your AGI exceeded $155,650 in 2017. For the years 2018, the phase-out threshold amount for married couples filing jointly is $355,000.