The tax reform bill that takes effect in 2018 contains significant provisions that impact nearly all of our clients. One such provision is that affecting the deductibility of unreimbursed employee business expenses such as business mileage, tools, equipment, and uniforms. In the past, these expenses have been treated as “miscellaneous itemized deductions” and deductible to the extent they exceed 2% of the taxpayer’s income.
Under the new law, this deduction has been completely eliminated. This will have a significant negative impact on many clients, especially those, such as sales persons, who claim unreimbursed business mileage. If you are in this category, we urge you to contact your employer and change your compensation so that the employer reimburses you for that mileage. Such a reimbursement will be tax-free to you and deductible to the employer. Even if you have to reduce your pay to compensate, it will be worthwhile since your pay is taxable and subject to payroll tax, while a mileage reimbursement is not.