Sarah: That’s not fair!
Jareth, The Goblin King: You say that so often. I wonder what your basis for comparison is.
At Bourke Accounting, Bill has a sort of hands-off, trial by fire, mentoring approach. Consistent with this philosophy, he handed me a book chock full of the new tax changes birthed by the Tax Cut and Jobs Act of 2017. While Bill is, no doubt, charmed by my blogging abilities, I believe he is serious in his request that I learn a thing or two about taxation in general. More importantly, I have a suspicion that there will be questions later. So, I am reading The Book and taking notes.
Having worked for accountants in the past, one of my jobs was chasing down people with home offices and employee expenses. I was that chirping nuisance asking for square footage used, percentage of utilities, meals and entertainment, etc. So, imagine my surprise when The Book told me that W-2 employees are no longer able to deduct unreimbursed work-related expenses, including home office expenses, on their returns.
Before the TCJA, besides home office deductions, if employees had expenses in excess of 2% of their adjusted gross income, well, they could just write those right off (Barrons.com). It’s been argued that, since the TCJA increased standard deductions, most people wouldn’t be affected by this change, so it was nothing more than an academic argument anyway. Uh, yeah, sure, that might have been true – at least, before the virus made the scene.
Even with the relaxation of lockdown rules, there are still a lot of people working from home now. Whether commandeering playrooms or kitchen tables, out-of-pocket expenses have been incurred; after all, Special Princess Palace Kingdoms don’t just magically transform into 9-5 professional workspaces. Many employees have had to upgrade internet service, buy chairs that won’t destroy their backs and incidentals like printer ink. Would all these expenses top their standard deduction? Maybe, maybe not, but these employees are still using their own money to outfit a workable, satellite office. The standard deduction is great for a future tax return, but what about right now?
One option for these homebound employees is an accountable plan. With this sort of an agreement, employees can bill employers for their expenses. The employers can then deduct for expenses they pay back to the employees (Investopedia.com). However, there are no federal rules saying a company has to do this, unless these expenses push a “worker’s income to below the minimum wage” (Barrons.com). Another option would be for Congress to allow W-2 employees to specially deduct employee expenses for a limited time, separately and in addition to the standard deduction. It could happen…
The world is more unfair than usual these days and it’s up to the powers that be to do what they can to level the field a bit. Hey, Congress, let’s get creative and funky! As the workers are the economy, there should be incentives and rewards put into play.
With changes coming fast and heavy these days, it’s nice to know that your Bourke Accounting bookkeepers and tax preparers are keeping up. No matter what insane alterations are on the horizon, Bourke Accounting experts will have the answers to all of your questions. It’s probably a sick obsession, but – lucky you – Bourke Accounting specialists live for this stuff.
Written by Sue H.