If at the end of the year you dutifully compiled your business expenses for items not reimbursed by your employer, looked up the safe deposit box fee you paid for last year and unfolded the invoice from last year’s tax preparation to provide to your tax professional to claim a miscellaneous itemized deduction, you can change your behavior pattern considering the Tax Cuts and Jobs Act of 2017.
Deductions for tax preparation fees, safe deposit box fees, employee business expenses including the home office deduction, expenses to produce income, union and professional dues, uniforms and protective clothing for work, legal fees for estate planning as well as certain other miscellaneous deductions are no longer deductible items. Prior to the Tax Cuts and Jobs Act of 2017, these expenses were deductible as itemized deductions to the extent they exceeded 2% of your adjusted gross income.
The most notable miscellaneous itemized deduction to be eliminated under the bill is the deduction for investment advisory fees. Gone are the days of receiving a report from your investment advisor of the fees paid to be used as part of your income tax preparation. Any financial advisory compensation paid via commissions will retain its character as an expense of the sale or an addition to the cost of the security purchased.
Expenses that are attributable to a bona fide business, such as tax preparation fees and the home office deduction, will continue to be deductible as a business expenses either on the entity return or Schedule C if you’re a sole proprietor.
Cheryl Dickerson, CPA