We can start filing personal taxes in a few days- this coming Monday. (Please note- the IRS will STILL not have several forms ready for use until late next week. Thanks to the retroactive changes in the law Congress approved late last month.)
So, let’s review what you can and can’t do.
Oh, no, you can’t!!!!!
Let’s start with what you used to do and can no longer.
Don’t bother collecting all your employee expenses for which your boss never bothered to reimburse you. They no longer are deductible- whether or not they exceed 2% of your adjusted gross income. (Which is kind of okay, since many of you won’t be able to itemize anyway.)
EXCEPT… (This is the tax code- there are ALWAYS exceptions)
If you are in the Reserves (that’s armed forces, folks), are handicapped of some sort and have impairment based work expenses, are a fee-based state or local government official, or a qualified performing artist, then you can deduct those expenses related to these acts. You need to use either Form 2106 or 2016-EZ and add the computed deduction to line 11 of Schedule 1 (Form 1040).
Now for those never-evers.
Commuting is not deductible (unless, in a very limited sense, we are talking about the folks above)
Lobbying is not deductible (that means even if you travel to Washington DC to convince someone to pass some legislation)
Campaign contributions (no, they are never charity! And, advertising in a convention bulletin, a dinner or program at such events are also your personal expenses.)
Fines and Penalties (those traffic tickets, parking fines, etc. are all your personal expenses for being a scofflaw)
Club dues (It makes no difference if you conduct business meeting’s there- just the cost of the meal is allowable, if genuine business is discussed. This includes airline clubs, unless you really do effect- and document the business matters involved- and deduct the DAILY cost of the visit.)
Moving expenses. I’ve already written about this lost deduction. (Unless you are in the military and have orders to move, there is no way you can deduct your moving costs. Worse yet, your employer may have to report the moving expenses they paid on your behalf as taxable income to you! Between this lost deduction- and the lost ability to expense off the costs for seeking a new job- the historic migration of Americans has been greatly attenuated. As has been the ability to find higher paying jobs- since they often required a ‘change in scenery’.
Woo-Hoo. They’re back!
Congress (and TheDonald) retroactively amended the tax code in December with the budget reconciliation bill. In particular, this change can help many folks reconsider if they can itemize this year.
Medical Expenses. As long as they exceed 7.5% of your adjusted gross income. The money spent below the threshold is all yours to spend; above the threshold is deductible. This includes fertility treatments, alcoholism treatment (inpatient, including meals and lodging), anti-smoking programs (but only prescription drugs, not nicotine patches), and service animals (buying, training, maintaining [including food!] all count. Sorry, Weight Watchers, Nutrisystem, and those of that ilk don’t qualify- UNLESS your doctor has so prescribed a program (obesity or cardiopulmonary causes). Neither do those cold remedies (and other non-prescription drugs- except for insulin) and certainly NOT cosmetic surgery.
For those special cases…
Gambling losses are deductible. Kind of. As long as your winnings meet or exceed those costs. (In other words, you are attenuating the gambling winnings you must report.)
Casualty and Theft losses. Only for income producing property. Like rental property and vacant lots. Or, if you (heaven forbid) were impacted among others in a Federal Disaster Zone. Also, if you trade in gold and silver- yeah, that could be pushed through, too. (You already deduct losses on stocks and bonds on Schedule D and Form 4797- to the extent of your gains PLUS $3000. Ponzi scheme sufferers also can deduct losses against the gains. So, that $300,000 loss may take you 100 years to deduct. May you live that long.)
Home offices. You need to have a business- that means Schedule C (proprietorships and gig workers), Schedule E (rental property, K-1 recipients who WORK in that business), and/or Schedule F (farmers) filers.
Special dues. NOT clubs- but chamber of commerce, boards of trade, business leagues, public service or civic organizations, trade associations, professional societies, and real estate boards are specifically approved. NOT union dues (since they are employee expenses, folks.)
I already reported what sort of documents you need to have on hand to have us file your taxes.
We’re waiting for you!