Job Expenses and Certain Miscellaneous Deductions
Miscellaneous expenses include unreimbursed employee business expenses, tax preparation fees, and other miscellaneous fees.
Based on the new tax law, for tax years 2018 through 2025, you’re no longer allowed to take an itemized deduction for the miscellaneous expenses subject to two percent of your adjusted gross income (AGI).
Your AGI is your gross income less certain adjustments to your income and can be found on your tax return.
You could deduct certain miscellaneous expenses as itemized deductions to the extent they collectively exceeded two percent of your adjusted gross income (AGI).
These miscellaneous expenses include unreimbursed employee business expenses such as home office deduction, tax preparation fees, and certain other expenses.
The new tax law eliminated the miscellaneous itemized deductions subject to the two percent of your AGI.
Therefore, you can no longer deduct any unreimbursed employee business expenses, tax preparation fees, or certain other expenses.
How will this affect me?
Aiden started a new job as a cybersecurity analyst in 2018. He wanted to stay on top of the latest advances in his field so he paid $2,500 for training classes provided by a reputable trade association in his field. Aiden’s employer didn’t reimburse him for the training expenses. He expects to report an AGI of approximately $65,000 on his 2018 tax return. Aiden won’t be able deduct these expenses as an itemized deduction on his 2018 tax return even though they exceed two percent of his expected AGI.
Chloe typically gets her tax returns prepared by a local tax return preparer, who is known to charge high preparation and filing fees. Because Chloe will no longer be able to include this expense as an itemized deduction (subject to two percent of her AGI), she will need to rethink her return preparation options in 2018.
Lisa works for an IT corporation and her employment agreement requires her have a home office. Lisa works most of her work week out of her home office. Beginning in tax year 2018, Lisa will no longer be able to take an itemized deduction for her home office expenses because the new law eliminated the deduction for unreimbursed employee business expenses.