The Tax Cuts and Jobs Act (TCJA) was intended to simplify taxes by giving taxpayers more incentive to take the standard deduction and less incentive to itemize, beginning in 2018. It's debatable whether taxes are simpler, but there's no doubt that some deductions will be lost after 2017.
In exchange for a near doubling of the standard deduction, many tax deductions were eliminated for the 2018 tax year and beyond, although some are scheduled to return in 2026. The 2017 tax year (this year's filing) may be your last chance to apply these deductions for years – or it may be the last chance ever.
Moving Expenses – Through 2017, work-related moving expenses may be deductible if your new job is located at a minimum of 50 miles farther away from your original home than your old job was and you moved to be nearer the new job. Use IRS Form 3903, "Moving Expenses" to determine your deduction amount. See IRS Tax Topic 455 for further details on qualification.
The moving expense deduction has higher value because it's an above-the-line deduction – meaning that you don't have to itemize to take the deduction and the deduction subtracts directly from the adjusted gross income (AGI). Deductions that lower your AGI can help your eligibility for other tax breaks that depend on AGI limits.
Starting in tax year 2018, the moving expense deduction will only be available to active duty military members who are relocating due to military orders.
Job Expenses and Miscellaneous Deductions – These are all of the expenses listed on lines 21-23 of Schedule A. All of the deductions in this section – unreimbursed employee expenses, tax preparation fees, and other miscellaneous expenses as outlined in IRS Publication 529 – are deductible up to a value of 2% off the adjusted gross income (AGI).
To take the unreimbursed employee expense deduction, fill out Form 2106 to determine the amount of your deduction. The first section of the form covers expenses for meals and entertainment and the second section covers vehicle expenses. You may choose the standard mileage rate of 53.5 cents or outline the actual expenses like fuel, maintenance costs, and depreciation if you own the car.
See Publication 529 for further details on the tax preparation fees deduction and other miscellaneous deductions in the 2% category. Note that there are other miscellaneous deductions (covered under line 28 in Schedule A) that are not subject to the 2% rule and follow different criteria. Those deductions remain intact.
While they are set to disappear in 2018, all of the deductions under the Job Expenses and Miscellaneous Deductions category are set to reappear in 2026 under the terms of the TCJA. The full moving expense deduction does not have an anticipated date of return, but it's possible that Congress may restore it in the future – similar to the way some tax benefits were restored as part of the recently signed budget bill.
Take advantage of these and other disappearing tax breaks while you can, especially any above-the-line deductions. For other deductions that require itemizing, be sure that the total savings is still greater than the existing standard deduction. Otherwise, you're better off with the standard deduction.
Meanwhile, keep up with the news for any future tax changes. We've already seen one set of adjustments since the TCJA was passed – and in a mid-term election year, don't be surprised if Congress tweaks taxes yet again.
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