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workplace travel expenses

Can employees deduct work-related travel expenses?

In many cases, no. A wide range of employee work-related expenses are no longer deductible starting in the 2018 tax year. In fact, many tax filers may not itemize deductions at all since the standard individual deduction has been increased to $12,000. While preparing your taxes may be simpler, some individuals may lose deductions they have claimed in the past such as work-related travel expenses. In many situations, the company can still claim travel as a business expense, but the employee cannot. This change in the tax law is expected to last until 2026.

Deducting business travel expenses prior to 2018

In the past, employees often deducted miscellaneous work-related travel expenses if the total exceeded two percent of their adjusted gross income (AGI). Expenses included unreimbursed travel and mileage.

Deducting travel expenses for 2018

For the most part, you will not be able to deduct unreimbursed travel expenses. Businesses can still deduct travel expenses. Self-employed individuals can also still deduct travel expenses. You will also not be able to deduct moving expenses, and if your company pays for you to relocate, you’ll need to claim reimbursed moving costs as taxable income.

Can I deduct commute costs in 2018?

Again, no. You may be able to claim some expenses if you need to travel to a temporary work location for a limited amount of time. You may also be able to deduct expenses related to traveling between multiple job sites. If you qualify for this deduction, you need to include the latest version of Form 2106 with your return.

Other tax deductions going away in 2018

When filing for the 2018 tax year, you will no longer be able to deduct:

  • Tax preparation fees
  • Personal exemptions
  • Unrestricted home equity loan interest
  • Casualty and theft losses (except in disaster areas)
  • Employers will no longer be able to deduct parking and transit costs
  • Job expenses such as license and regulatory fees
  • Employees will not be able to deduct expenses such as tools, scrubs or classroom supplies (over $250)
  • Home office costs
  • Work-related legal fees
  • Medical examinations required by an employer
  • Alimony if divorced after December 31, 2018

What can I do to improve my tax situation?

Many tax professionals are suggesting that you consider one of three options. Whether these strategies will work for you depends on your situation, but they are worth considering.

  1. Talk to your employer about the company absorbing some of your costs that the company can then claim as a legitimate expense. Or ask them for a raise to cover your out-of-pocket costs.
  2. Consider becoming a freelance or independent contractor so you can claim the expenses yourself.
  3. Start your own business.

Since many of the new tax law changes favor businesses, now may be a good time to form your own company if you have any aspirations to do so. If you have a good business idea, we can help you start a business.

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