Employee Business Expenses & Tax Reform

Article Highlights:

  • Miscellaneous Itemized Deductions Subject to the 2% AGI Floor 
  • Employee Business Expenses 
  • Employee Reimbursement Plan (Accountable Plan) 
Note: This is one of a series of articles explaining how the various tax changes in the GOP’s Tax Cuts & Jobs Act (referred to as “the Act” in this article), which passed in late December of 2017, could affect you and your family, both in 2018 and future years. This series offers strategies that you can employ to reduce your tax liability under the new law. 

If you are an employee (i.e., a W-2 wage earner) with substantial work-related business expenses, the Act was not kind to you. It suspended (and effectively repealed), for 2018 through 2025, all miscellaneous itemized deductions, which were previously only subject to a floor of 2% of adjusted gross income (AGI). Employee business expenses are included in that category of miscellaneous itemized deductions.

This change affects those who are compensated as employees and who have work-related expenses—including salespeople with travel and entertainment expenses, long-haul truck drivers with away-from-home expenses, mechanics with tool expenses, and any other employees with large but unreimbursed business expenses. These employees, beginning in 2018, will no longer be able to count such expenses as itemized deductions.

Will this change hurt you? That depends. Because employee business expenses could previously only be deducted to the extent that they exceeded 2% of AGI, the effects of the Act will depend upon the extent of your expenses. Another consideration is whether your total itemized deductions would have exceeded the new standard deduction, which has increased for 2018.

As a remedy, you may want to contact your employer and try to negotiate an “accountable plan,” which is a business-expense reimbursement plan under which the employer can reimburse you, tax-free, for business expenses. With this arrangement, you would need to substantiate your business expenses to your employer and would have to return (within a specified time limit) any reimbursements that your employer pays in excess of the substantiated amount.

If you have questions related to the loss of this deduction or about how the change will impact your specific tax situation, please give this office a call.

Share this article...

Want tax & accounting tips and insights?

Sign up for our newsletter.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .
I consent to receive SMS messages

Standing Up for People Like You

Get to Know Us

Welcome to Books, Taxes & More, located in Atlanta's southwestern suburb, Stone Mountain, GA. We proudly specialize in providing top-tier IRS and state tax authority representation, with additional services in tax preparation and bookkeeping. Our tax representation services are designed for clients who recognize they have a tax problem and want to resolve it urgently.

We also offer comprehensive tax preparation services, especially for those with complex returns, and bookkeeping as a supplementary service.

IRS and State Tax Authority Representation

If you've received a letter from the IRS or the state department of revenue, you need an expert who can help you navigate these challenges swiftly and effectively. We work with taxpayers who have the resources to invest in high-quality representation, and a collaborative mindset. We pride ourselves on our expertise and commitment to resolving your tax issues efficiently. With over a decade of experience, we know how to protect taxpayers from the IRS and state authorities, ensuring your financial well-being.

Why Choose Us?

  • Expertise and Experience: With over ten years in the industry and credentials as a Certified Tax Resolution Consultant, our founder, Steve Perry, brings a wealth of knowledge to each client engagement. Steve is also a member of the National Association of Enrolled Agents (NAEA) and the Tax Rep Network.

  • Passion for Advocacy: Our team is passionate about defending our clients against the IRS and resolving tax debt issues. We believe in standing up against bullies and helping you achieve financial freedom.

  • Specialized Knowledge: Our continuous education, including extensive studies in cryptocurrency and blockchain, enables us to support crypto traders and other clients with unique financial situations.

  • Community Involvement: As an active member of Rotary Club International and other local volunteer efforts, Steve is dedicated to making a positive impact both professionally and personally.

Make your business more profitable today.

Call us at (678) 717-9818 for a consultation.

Contact Us Now