A recent report from the Federal Reserve Board found that three in ten American adults are working in the "gig economy" - typically as a way to pick up more money. . Now, it may make good tax sense for even more taxpayers to have a side hustle.
As part of tax reform, tax-favored provisions could potentially be eliminated. Specifically, un-reimbursed job expenses and miscellaneous deductions subject to the 2% floor previously reported on a Schedule A, Itemized Deductions, may no longer available for the tax years 2018 through 2025. Those expenses include those that are potentially incurred doing a job such as tools and supplies and job search expenses. They also include un-reimbursed travel and mileage, as well as the home office deduction.
The potential impact on taxpayers? According to data from the Internal Revenue Service (IRS), in 2015, the last year for which complete statistics are available, nearly 14 million taxpayers claimed the un-reimbursed job expenses deduction. Taxpayers claiming miscellaneous deductions subject to the 2% limit on line 27 saved $113,175,000,000 in 2015. Those deductions are now gone.
However, Congress didn't tinker with those same expenses on a Schedule C, Profit or Loss from Business (Sole Proprietorship). If, as a business owner, you typically file a Schedule C, your business-related deductions are not affected by the elimination of Schedule A deductions. And that - intentionally or not - presents some great planning opportunities for taxpayers.
This blog is not necessarily the opinion of ODICA it is simply informational. All tax related issues should be discussed with an accountant specializing in taxes