Big changes are coming for 2018 and beyond with the new tax bill that passed through the House and Senate in December, 2017. Parts of the new bill substantially increase the standard deduction while also removing and/or changing many of the itemized deductions. One of those changes concerns expenses incurred as part of a job from which you receive W2 wages; these expenses are going away along with almost all other miscellaneous itemized deductions subject to the 2% floor. (Note – this does not include mortgage interest, charitable deductions, medical deductions or taxes, though those are more limited now.)
This means that as of January 1, 2018, it is no longer necessary to keep records for individual income tax purposes, since you will not be reporting these expenses; but you will still want to keep these records for a few other reasons:
- You should ask your employer about reimbursing your expenses under an accountable plan. You can turn in receipts and/or mileage reports and be reimbursed at a rate that you and your employer agree upon.
- If you are an employer, consider reimbursing employee expenses under an accountable plan. This will give a benefit to the employee that they would otherwise not have and allows you to reduce your taxable income by the amount you reimburse.
If you have any questions regarding job related expenses and mileage reimbursement, please give us a call or come in for a visit to discuss further.
-Heritage Accounting and Tax Services