Under tax reform, individuals who itemize should be aware that deductions they may have previously counted on to reduce their taxable income have disappeared in 2018. Here are five of them.

1. Moving Expenses

For tax years 2018 through 2025, moving expenses are no longer deductible unless you are a member of the Armed Forces on active duty who moves because of a military order. Prior to tax reform (i.e., for tax years starting before January 1, 2018), taxpayers could deduct expenses related to moving for a job as long as the move met certain IRS criteria.

2. Unreimbursed Job Expenses

For tax years starting in 2018 and expiring at the end of 2025, miscellaneous unreimbursed job-related expenses that exceed 2% of adjusted gross income (AGI) are no longer deductible on Schedule A of Form 1040. Examples of unreimbursed job-related expenses include union dues, continuing education, employer-required medical tests, regulatory and license fees (provided the employee was not reimbursed), and out-of-pocket expenses paid by an employee for uniforms, tools, and supplies.

3. Tax Preparation Fees

Tax preparation fees, which fall under miscellaneous fees on Schedule A of Form 1040 and are also subject to the 2% floor, have been eliminated for tax years 2018 through 2025. Tax preparation fees include payments to accountants, tax prep firms, as well as the cost of tax preparation software.

4. Personal Exemptions

Repealed for tax years 2018 through 2025, the personal exemption enabled individual taxpayers to reduce taxable income by $4,050 (in 2017). Each household dependent was entitled to the deduction as well. While the standard deduction did increase significantly ($12,000 for individuals, $24,000 for married taxpayers filing jointly, $18,000 for heads of household), some taxpayers may still lose out.

5. Subsidized Parking and Transit Reimbursements for Employers

Before tax reform, employees could take advantage of a perk offered by many employers whereby parking and transit pass costs (up to $255 per month) were reimbursed by their employers tax-free (i.e., not included in the employee’s taxable income). These amounts were deductible to companies on their tax returns; however, for tax years 2018 through 2025, the deduction is no longer available leading to the possibility that some employers to stop reimbursing their employees for parking and transit costs.

Help is just a phone call away.

Don’t hesitate to call the office if you have any questions about tax reform and how it affects your particular tax situation.

• By Leon Clinton
• July 3, 2018

July 10

Employees Who Work for Tips – If you received $20 or more in tips during June, report them to your employer. You can use Form 4070.

July 16

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in June.

Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in June.

July 31

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the second quarter of 2018. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until August 10 to file the return.

Employers – Federal unemployment tax. Deposit the tax owed through June if more than $500.

Employers – If you maintain an employee benefit plan, such as a pension, profit-sharing, or stock bonus plan, file Form 5500 or 5500-EZ for calendar-year 2017. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.

Certain Small Employers – Deposit any undeposited tax if your tax liability is $2,500 or more for 2018 but less than $2,500 for the second quarter.

• By Leon Clinton
• July 1, 2018

Thanks to the passage of the Tax Cuts and Jobs Act last year, there’s a new tax benefit for employers: the employer credit for paid family and medical leave. As the name implies, employers may claim the credit based on wages paid to qualifying employees while they are on family and medical leave.

Here are six facts about this credit and how it benefits employers:

1. To claim the credit, employers must have a written policy that meets certain requirements such as:

• Employers must provide at least two weeks of paid family and medical leave annually to all qualifying employees who work full time. This can be prorated for employees who work part-time.
• The paid leave must be not less than 50 percent of the wages normally paid to the employee.

2. A qualifying employee is any employee who has been employed for one year or more, and for the preceding year, had compensation that did not exceed a certain amount. For employers to take this credit in 2018, the employee must not have earned more than $72,000 in 2017.

3. “Family and medical leave” as defined for this particular credit, is leave that is taken for one or more of the following reasons:

• Birth of an employee’s child and to care for the newborn.
• Placement of a child with the employee for adoption or foster care.
• To care for the employee’s spouse, child, or parent who has a serious health condition.
• A serious health condition that makes the employee unable to perform the functions of his or her position.
• Any qualifying event due to an employee’s spouse, child, or parent being on covered active duty – or being called to duty – in the Armed Forces.
• To care for a service member who is the employee’s spouse, child, parent, or next of kin.

4. The credit is a percentage of the amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year.

5. To be eligible for the credit, an employer must reduce its deduction for wages or salaries paid or incurred by the amount determined as a credit. Any wages taken into account in determining any other general business credit may not be used toward this credit.

6. The credit is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017. It is not available for wages paid in taxable years beginning after December 31, 2019.

For more information about the employer credit for family and medical leave, please contact the office.

• By Leon Clinton
• June 25, 2018