Update: Tax Reform Law: Elimination of Miscellaneous Itemized Deductions

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The new tax law eliminates most itemized deductions, starting in 2018. Under prior law, the following deductions were deductible if they exceeded 2% of your adjusted gross income.

For 2018 through 2025, this change eliminates deductions for a wide variety of expenses, such as:

Tax-Related Expenses

  • Tax preparation expenses,
  • Tax advice fees, and
  • Other fees and expenses incurred in connection with the determination, collection, or refund of any tax.

Expenses Related to Taxable Investments

  • Investment advisory fees and expenses,
  • Clerical help and office rent for office used to manage investments,
  • Expenses for home office used to manage investments,
  • Depreciation of computer and electronics used to manage investments,
  • Fees to collect interest and dividends,
  • Your share of investment expenses passed through to you from partnership, limited liability company or S corporation,
  • Safe deposit box rental fee for box used to store investment items and documents, and
  • Other investment-related fees and expenses.

Expenses Related to Production of Taxable Income

  • Hobby expenses (limited to hobby income),
  • IRA trustee/custodian fees if separately billed to you and paid by you as the account owner,
  • Loss on liquidation of traditional IRAs or Roth IRAs,
  • Bad debt loss for uncollectible loan made to employer to preserve your job, and
  • Damages paid to former employer for breach of employment contract.

Unreimbursed Employee Business Expenses

  • Education expenses related to your work as an employee,
  • Travel expenses related to your work as an employee,
  • Passport fees for business trips,
  • Professional society dues,
  • Professional license fees,
  • Subscriptions to professional journals and trade publications,
  • Home office used regularly and exclusively in your work as an employee and for the convenience of your employer,
  • Depreciation of a computer that your employer requires you to use,
  • Tools and supplies used in your work as an employee,
  • Union dues and expenses,
  • Work clothes and uniforms if required for your work and not suitable for everyday use,
  • Legal fees related to your work as an employee, and
  • Job search expenses to seek new employment in your current profession or occupation.

©2018


Any accounting, business, or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough analysis of specific issues, nor a substitute for a formal opinion, nor was it written to be used to avoid tax related penalties.