One of the most significant changes brought about by the Tax Cuts and Jobs Act (TCJA) last year was the elimination of certain personal itemized deductions. Starting this year, and continuing through 2025, taxpayers will no longer be able to deduct most “miscellaneous” expenses. In this article, Marcia L. Campbell CPA explains everything you need to know.
The “miscellaneous itemized deductions” that were deductible to the extent they exceeded 2% of a taxpayer’s adjusted gross income are listed below.
These five deductions are no longer deductible in 2019:
1. Job Expenses:
- work-related travel, transportation, and meal expenses
- union dues
- business liability insurance premiums
- depreciation on a computer or phone you use in your work
- dues to professional societies
- education (work-related)
- home office expenses
- expenses of looking for a new job in your present occupation
- legal fees related to your job
- subscriptions related to your work
- tools and supplies used in your work, and
- work clothes and uniforms
2. Investment Expenses:
- investment advisory and management fees
- fees for legal and tax advice related to your investments
- trustee fees to manage IRAs and other investment accounts, and
- rental fees for a safe deposit box.
3. Tax preparation fees:
This includes costs for hiring a tax pro or buying tax preparation software or tax publications. It also includes any fee you pay for electronic filing of your return.
Tip: If you have a tax pro prepare both your personal and business taxes, ask for a separate bill for your business return. This way, the fees to prepare your business return remain a fully deductible business expense— not a personal itemized deduction.
4. Hobby expenses:
Despite still having to report and pay taxes on any income you earned from a hobby, you will not be able to deduct any expenses you incur from these hobbies. However, if your hobby involves selling goods to customers, you may deduct your costs of goods sold when calculating your hobby income.
5. Fees from the IRS:
You may no longer deduct any attorney fees, accounting fees, and other fees you incur to contest or claim a refund of any tax.
The Good News? Taxes Will Take Less Time!
While many of us were not happy to hear that these itemized deductions will no longer be deductible, there is some good news. This tax reform will significantly cut down how long it will take you to do your taxes. Additionally, the standard deduction will work out very well for many people and will actually leave you better off!
Lastly, if you are among those who have waited until the very last minute to do your taxes, you will be happy to know that there is a way to get an extension on the tax deadline.