Are Deductible Employee Business Expenses Gone?

When President Trump signed the Tax Cuts and Jobs Act (TCJA) late in 2017, one of significant changes was the temporary suspension of miscellaneous itemized deductions being deducted. In that category included expenses incurred by employees in the performance of their duties, such as mileage, travel, meals & entertainment, home office expense, etc. (It should be noted that California does still allow these deductions.)

I'm not writing today to announce some innovative way of making those expenses suddenly deductible again. This might be better, particularly if you're a California taxpayer. What could be better than getting a tax deduction for these expenses? Getting REIMBURSED for the expenses! This becomes even more important in the era of COVID-19, when many employees are working remotely from their home and not necessarily by choice.

How does that happen? Well you could first simply ask the employer. Some will do it as good business practice. However there is a hammer an employee can use to force the employer's hand in this matter. California Labor Code §2802 requires employers to reimburse California employees for “all necessary business expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Seems pretty straight forward right? A full in depth discussion of what is necessary and reasonable for this purpose is a pretty in depth conversation, and something best left to labor attorneys, but I can say that the California Labor Board does take this provision seriously and enforces it.

So while you still can't deduct your remote home office, you might get reimbursed for it.