IRS Clarifies Deductible Expenses
The IRS is offering some updated rules as guidance for deductible expenses that may have been murky as a result of the Tax Cuts and Jobs Act. The rules being updated involve using optional standard mileage rates when figuring the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes, among other issues.
The full details are available in Revenue Procedure 2019-46 and Revenue Procedure 2019-48.
There are more succinct rules to substantiate the amount of an employee's ordinary and necessary travel expenses reimbursed by an employer using the optional standard mileage rates. But know that you're not required to use this method and that you may substantiate your actual allowable expenses, provided you maintain adequate records.
The TCJA suspended the miscellaneous itemized deduction for most employees with unreimbursed business expenses, including the costs of operating an automobile for business purposes. However, self-employed individuals and certain employees, armed forces reservists, qualifying state or local government officials, educators, and performing artists may continue to deduct unreimbursed business expenses during the suspension.
The TCJA also suspended the deduction for moving expenses. However, this suspension doesn't apply to a member of the armed forces on active duty who moves pursuant to a military order and incident to a permanent change of station.
The IRS has also made it clear that the TCJA amended prior rules to disallow a deduction for expenses for entertainment, amusement or recreation paid for or incurred after Dec. 31, 2017. Otherwise allowable meal expenses remain deductible if the food and beverages are purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment.