Understanding the Consequences of the New Tax Cuts and Jobs Act

Last year, union dues and other job-related expenses exceeding 2% of adjusted gross income (AGI) could still be deducted as miscellaneous deductions. However, for 2018 (and for the foreseeable future), those deductions have been eliminated. All work-related tools, supplies, clothing, union dues, and other work expenses are no longer deductible. The same is true for home office expenses and unreimbursed travel and mileage costs.

Thankfully, new proposed legislation might help combat the harmful aspects of the Trump Administration’s tax law and put more money in American worker’s pockets instead of the IRS’ coffers. Keep reading to learn more.

What Is the Tax Fairness for Workers Act?

First introduced to Congress in April 2018, the Tax Fairness for Workers Act is a bill sponsored by Democratic U.S. Senator Robert Casey Jr. of Pennsylvania. The Tax Fairness for Workers Act aims to create tax breaks for unreimbursed job expenses like those mentioned above.

The bill would continue the long tradition of allowing taxpayers to deduct work-related expenses as miscellaneous deductions on Schedule A. In addition, the bill would categorize union dues and expenses as “above-the-line” deductions, a category which includes various non-itemized deductions like moving expenses, the student loan deduction, and contributions to an IRA, among others.

The bill currently rests with the Committee on Finance, and experts doubt it will become law without significant changes. However, Senator Casey appears resolute in his attempt to combat the Tax Cuts and Jobs Act, saying:

“The GOP tax bill was a partisan giveaway to the super wealthy and corporations, leaving the American worker behind. Although it is now signed into law, I will continue to fight to reform their scheme into something that is focused on working Americans. Reinstating the deductions for union dues and unreimbursed job expenses is just the start of what we need to do for the millions of Americans who were left out of the GOP tax bill.”

Regardless of whether the Tax Fairness for Workers Act passes, it’s unlikely the provision eliminating deductions for work-related expenses will last until 2025, which is the year it’s currently set to expire.

The Importance of Work-Related Deductions for American Workers

Teachers, laborers, and self-employed professionals make up a large percentage of the American labor force, and eliminating their work-related deductions could potentially cost them hundreds or even thousands of dollars on their annual tax returns. Job expenses can add up quickly, especially for teachers, who already provide a critical service for little pay. Work-related costs can also pile up fast for individuals who frequently travel for work and don’t receive reimbursement from their employer.

In years past, the government only considered “ordinary and necessary” expenses to be eligible for work-related deductions. Here are just a few of the more common expenses that previously qualified for work-related tax deductions:

• Legal fees that were necessary for the ordinary purpose of your occupation
• Licensing and regulatory fees
• Occupational taxes
• Union and local trade dues
• Work-related continuing education
• Uniforms and other clothing required for your job
• Employer-mandated medical examinations
• Upkeep for a home office if it was used exclusively for work
• Travel and mileage for work-related activities (but not necessarily to and from work itself)

If Senator Casey’s bill fails to make headway and no other legislation addresses the issue, American workers could be footing the bill for many of the necessary costs for their jobs.

If you have any questions about the new tax law, pending legislation, or which deductions you may be eligible for, you should contact a skilled and experienced tax resolution firm for assistance and answers to your questions.

Contact S.H. Block Tax Services for Help Filing Complicated Tax Returns

S.H. Block Tax Services is a family-owned and operated tax resolution firm serving the citizens of Baltimore and the state of Maryland. We have decades of experience helping our fellow residents, and we’ve earned an A+ rating with the Better Business Bureau for our tradition of excellence.

If you or someone you know needs help resolving a tax issue or filing complex tax returns, please reach out to us today and schedule a free, no-obligations consultation. We also handle bookkeeping for small businesses, and we’re ready to help you in any way we can.

Please call (410) 872-8376 or complete this online form to schedule your appointment today!

The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.