The Tax Cuts and Jobs Act (TCJA) implemented for the 2018 tax year has been making an impact as individuals file their returns this season. One of the biggest differences that many Americans are noticing is the reduced tax rates and increase in standard deduction for many who are filing. These differences are changing the bottom dollar for some, in terms of refunds but the main focus for many W-2 employees has been on the specific changes associated with the TCJA. 

One of the biggest involves automobile deductions for W-2 employees who were previously not reimbursed for their travel expenses associated with employment. Before this tax season, individuals were required to keep up with all of their mileage and any bills associated with business travel, which could be added to their tax return as many would then receive a reduction in the impact of their taxable income due to the travel portions of their filing.

This year, the standard deduction has been dramatically increased and while travel expenses are still deductible for some, all W-2 employees are not eligible for these filings.

CHANGES

One of the biggest differences for individuals who were able to itemize on their previous tax returns is the difference in auto related deductions. Previously, individuals whose travel, not including personal mileage and travel to and from the workplace - were able to deduct these miles and apply the totals to their return. 

In addition, car care and upkeep was also part of the totals used for calculating the deduction purposes. The standard deduction increase by virtue of the TCJA has eliminated these components and how the tax reform affects your 2018 mileage deductions.

ADJUSTMENTS

There are a couple of ideas for those affected by this change, including having your employer reimburse you for the travel expenses. Since there will be no specific tax implication, the reimbursement from an employer comes tax free as opposed to any increase in salary. By having your employer pay you back for the work associated miles, individuals can reduce the impact of not being able to “count” their mileage and other vehicle deductions on the tax return itself.

Another option would be to inquire about the acquisition possibilities of company specific transportation. The use of a company car would be beneficial to the employer while allowing their employees to not worry so much about their travel requirements. The differences would be sizeable as companies examine the possibilities of a company corps of travel, but the benefits could be beneficial to both employees and their own corporate returns.

The tax experts at Bloch Rothman and Associates are able to assist with any of these proposed changes to your return or examine the impacts of corporate additions to their own travel plans. Serving in Denver and all of the surrounding areas for 35 years, our firm has an extensive history in helping clients with any and all of their tax issues or dealings with the Internal Revenue Service. If you have questions about your personal, business, estate or any other filings, don’t hesitate to contact us today. Available for all of your tax needs and filings there are also a number of bookkeeping and payroll services offered to assist you and your business. We look forward to meeting you and serving whatever your needs may be soon!