The IRS has updated Notice 2018-3, I.R.B. 2018-2, 130, to reflect changes to the tax law made by the Tax Cuts and Jobs Act ( P.L. 113-97). Changes impacting Notice 2018-3include:
- the suspension of the deduction for unreimbursed employee expenses;
- the suspension of the deduction for moving expenses; and
- the increase of depreciation limits for passenger vehicles.
Unreimbursed Employee Expenses
Section 3 of Notice 2018-3 stated that taxpayers, including those deducting unreimbursed employee travel expenses, could use the standard mileage rate of 54.5 cents per mile. P.L. 113-97 suspended all miscellaneous itemized deductions that are subject to the two-percent-of-adjusted-gross-income floor until January 1, 2026. This includes unreimbursed employee travel expenses. Therefore, Notice 2018-3 generally cannot be used to claim a deduction for such expenses.
There are certain taxpayers, however, who may continue to deduct itemized unreimbursed employee travel expenses. These include:
- members of a reserve component of the U.S. Armed Forces;
- state or local government officials paid on a fee basis; and
- certain performing artists.
For these taxpayers, Section 3 of Notice 2018-3 will continue to apply for claiming deductions for unreimbursed employee travel expenses.
Section 3 of Notice 2018-3 provided a standard mileage rate of 18 cents per mile for moving expenses pursuant to Code Sec. 217. P.L. 113-97 suspended the deduction for moving expenses until January 1, 2026. This suspension does not apply to U.S. Armed Forces members on active duty who move pursuant to a military order under Code Sec. 217(g). Thus, the standard mileage rate for moving expenses listed in Notice 2018-3 does not apply, unless the Code Sec. 217(g) exception applies to the taxpayer.
Increase of Depreciation Limits for Passenger Vehicles
Section 5 of Notice 2018-3 provided the maximum depreciation limitations for passenger automobiles placed in service after December 31, 2017, for purposes of computing the allowance under a fixed and variable rate. The stated maximum for standard automobile cost was $27,300 for passenger automobiles, and $31,000 for trucks and vans. P.L. 113-97increased the depreciation limitations for passenger automobiles placed in service after that date. Under the new law, the maximum standard automobile cost may not exceed $50,000 for passenger automobiles, trucks, and vans placed in service after December 31, 2017. Notice 2018-3, I.R.B. 2018-2, 130, is modified.