Upcoming changes from the Tax Cuts and Jobs Act will directly affect moving related vehicle expenses, un-reimbursed employee expenses, and vehicle expenses. Your clients will definitely have questions about these changes and how they will affect their tax returns. It is important to remember that while many common deductions have been eliminated, the recent tax reform also made drastic changes to the standard deduction, nearly doubling it for many taxpayers (see the table below*).
The deduction for moving expenses for tax years after December 31, 2017 have been eliminated. This includes the deduction for the use of a vehicle as part of the move.
This change does not apply to members of the Armed Forces of the United States on active duty who are required to move to a permanent change of station for military orders.
Un-reimbursed Employee Expenses
All miscellaneous itemized deductions subject to 2 percent of AGI have been eliminated. This includes any un-reimbursed employee expenses such as uniforms, union dues, or the deduction for business-related meals. In addition to this, the business standard mileage rate can no longer be claimed as an itemized deduction for un-reimbursed travel expenses beginning after December 31, 2017.
Standard Mileage Rate
The standard mileage rate in 2018 will be:
- 54.5 cents for every mile of business travel
- 18 cents per mile for medical purposes
- 14 cents per mile driven for a charitable organization
Taxpayers are cannot use the business standard mileage rate on a vehicle if:
- They have already claimed a Section 179 deduction for the vehicle
- A depreciation method has been selected under Modified Accelerated Cost Recovery System
Increased Depreciation Limits
The depreciation limit for any passenger vehicle placed into service after December 31, 2017 has been increased. The new maximum standard vehicle cost may not exceed $50,000 for passenger vehicles, trucks, and vans.
*Increased Standard Deduction