One of the big losses for employees with the new tax law is that they are no longer able to deduct "unreimbursed employee expenses." For those that have employers who pay for all expenses this may not be a big deal. However there are several industries this will impact. Many times employers do not reimburse for mileage, this is no longer deductible. If you have to pay for your own licensing or equipment you can no longer deduct it. Union dues are also no longer deductible. If you have your own travel expenses or education expense for your job you can no longer deduct it. (Do you see the pattern?) Or maybe you work from home--no longer deductible. While this deduction was previously subject to a 2% AGI limitation it's now no longer allowed at all. Also if you went from one job to the other, in the past, you were allowed to take mileage between jobs--this is no longer allowed. These expenses can vary even by field. However, many sales people have lots of unreimbursed expenses that will now not be allowed. Also a lot of construction workers have expenses from travel to tools that will also not be allowed going further. One small win is that educators will still be allowed the front page deduction for up to $250 (which most people know is hardly anything).
If you fall into this category you may want to talk to your employer to see if there are other options for 2018.
One thing is certain, if you have previously taken employee expenses and have your exemptions set to take out less taxes because of this then you will want to adjust your W-4. If you don't adjust your withholding you will end up owing more money at the end of the year. Kansas does not allow employee deductions, so it will not impact your Kansas filing even if you've been taking those expenses in the past. Missouri currently starts with the Federal itemized deductions, so if you have had these expenses in the past they have benefited you and you will now lose those deductions. So again you may need to change your withholding allowances to make sure you will be taking enough taxes out.
If you fall into this category you may want to talk to your employer to see if there are other options for 2018.
- The first option would be for your employer to reimburse you for these expenses if they are necessary to do your job. Of course that always would have been a great options. However, many businesses got fairly sizable tax cuts (if they are corporations) so perhaps they will be more willing to help their employees. If an employer reimburses you under an accountable plan then it is not reported on the W-2 as additional income.
- If you fall into certain fields you may want to discuss being a statutory employee with your employer. The IRS provides the following guidelines for being a statutory employee (https://www.irs.gov/businesses/small-businesses-self-employed/statutory-employees) If you are a statutory employee you fall in sort of a middle ground between contractor and employee. Your income and expenses are reported on a Schedule C. So you would be allowed to deduct these expenses.
- Maybe it's time to venture out on your own and start your own business. If you are a contractor (not an employee) you would file a Schedule C and be able to deduct work related expenses. The down side to being a contractor is that you will not have any benefits from the company you are working for. You would also have to pay for your own social security and medicare expenses. There are definitions of employee vs contractor, so it's possible that you could not be classified as a contractor. However if you've ever thought about doing things on your own this may be the time to explore that option.
One thing is certain, if you have previously taken employee expenses and have your exemptions set to take out less taxes because of this then you will want to adjust your W-4. If you don't adjust your withholding you will end up owing more money at the end of the year. Kansas does not allow employee deductions, so it will not impact your Kansas filing even if you've been taking those expenses in the past. Missouri currently starts with the Federal itemized deductions, so if you have had these expenses in the past they have benefited you and you will now lose those deductions. So again you may need to change your withholding allowances to make sure you will be taking enough taxes out.
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