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TCJA’s Impact on Deductible Business Expenses

As a result of the Tax Cuts and Jobs Act (TCJA), rules for certain deductible expenses have been modified; with tax filing season just around the corner, the IRS has issued guidance for taxpayers regarding changes made by the TCJA.

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As a result of the Tax Cuts and Jobs Act (TCJA), rules for certain deductible expenses have been modified; with tax filing season just around the corner, the IRS has issued guidance for taxpayers regarding changes made by the TCJA.

As a result of the Tax Cuts and Jobs Act (TCJA), rules for certain deductible expenses have been modified; with tax filing season just around the corner, the IRS has issued guidance for taxpayers regarding changes made by the TCJA. 

The areas addressed are specific to deductible business, charitable, medical and moving expenses in regard to computing the deductible cost of operating an automobile. Revenue Procedure 2019-46 posted on www.irs.gov updates the rules for using the optional standard mileage rates for the computation for the four above-mentioned expenses. 

The IRS guidance also provides rules to substantiate the amount of an employee’s ordinary and necessary travel expenses that is reimbursed by an employer using the optional standard mileage rates. It should be noted that taxpayers are not mandated to use the method described in the revenue procedure, but can, instead, substantiate actual allowable expenses as long as adequate records are maintained. 

The TCJA has suspended a couple of deductions. The miscellaneous itemized deduction for most employees with unreimbursed business expenses, including costs associated with operating a car for business purposes, has been suspended. That said, those who are self-employed and certain employees, including Armed Forces reservists, qualifying state or local government officials, educators and performing artists, are allowed to deduct unreimbursed business expenses during the suspension period. 

Also suspended is the deduction for moving expenses, with the exception of members of the Armed Forces on active duty who move as a result of a military order to a permanent change of station. 

It may not make for the most fascinating reading – and there is a fair amount of it to do – but becoming acquainted with the many changes resulting from the Tax Cuts and Job Act should be considered time well spent. 

 

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