Tax filing season is only a couple months away. With the passage of President Donald Trump’s Tax Cuts and Jobs Act last year, filling out your tax forms might require a different strategy than what you’ve used in previous years. Here’s a breakdown of some of the more notable changes you need to consider for the 2018 tax filing season, including multiple deductions that are now kaput.
Increase to the Standard Deduction
Probably the most useful change for individuals and families is the increase in the standard deduction. The amount has almost doubled to $12,200 for individuals and $24,400 for families. These increases are supposed to increase the average household income by $4,000.
No More Personal Exemptions
Although increasing the standard deduction might be a good thing, you can no longer claim a personal exemption for yourself, your spouse or your dependents. This means you can no longer reduce your taxable income by $4,050 for each eligible member of your household.
State and Local Tax Caps
Known as SALT, the new tax law limits this tax deduction to $10,000, whereas previously it was unlimited. This could be a big drawback for people living in California, New York, South Carolina and other places where people pay high property taxes.
Reduced Mortgage Interest Deduction
New homeowners buying in 2018 will only be able to deduct up to $750,000 worth of interest from qualified residence loans, whereas before it was up to $1 million. This could pose another problem for residents living in states with high home prices that require larger mortgages, like New York and California. Furthermore, you will also be unable to deduct the interest from home equity loans unless they were used to ” buy, build, or substantially improve your main home or second home,” according to the IRS.
No More Job Expenses Claims
You could previously claim unreimbursed job-related purchases so long as they were more than 2 percent of your adjustable gross income. Unfortunately for strapped employees, that deduction will be eliminated for 2018’s taxes.
No More Moving Expense Claims
Transients could’ve deducted moving expenses from their taxes provided they met certain criteria, but the new tax law eliminates this, with the exception of military service members moving to new duty stations.
No More Natural Disaster Deductions
It’s been an intense several years for residents dealing with natural disasters; the California wildfires are just the most recent example. Prior to the new tax law, victims of circumstance could deduct at least half of the expenses they incurred. However, under the new tax law, you must live in a “presidentially designated disaster area” to be eligible for the deduction.
Other Miscellaneous Deductions That Have Been Eliminated
The new tax law will also eliminate multiple deductions that might dent your tax refund, or increase your tax bill:
- Alimony deductions
- Tax preparation fees
- Parking and transit reimbursement
- Reduction of charitable donations if used to acquire college athletic tickets
- Convenience fees for ATM use
These Are the Coolest Tax Deductions You’re Missing Out On
Lathering Yourself in Body Oil
Luxuriating in body oil might not seem like something you can write off, but if you’re a bodybuilder, there’s a precedent. That’s because one bodybuilder successfully argued that the body oil he needed to rub all over himself prior to competitions was a business expense and could be deducted from his taxes. He also got the tax courts to approve a deduction for the 3 pounds of bison meat he was consuming each day.
Shopping Till You Drop
Check this out: Your wild shopping sprees are tax-deductible. Or, at least, some of them are. That’s because you can deduct the cost of sales tax. Sales taxes are collected at the state level, so they can be included in your deductions for state and local taxes. Just be aware that you can’t deduct both sales tax expenses and income or property tax expenses, so you should only make this deduction when you’ve paid more in sales tax to the state than you did in other taxes.
Sweet Vegas Vacations
There’s good news about the beating that you took at the tables the last time you were in Sin City: It’s tax-deductible. That’s right, you can write off your gambling losses on your taxes. There is a major caveat, though: It only applies to any taxes you’ve paid on gambling winnings. So, if you did have a successful trip followed by a bad one, you can at least recover some of those losses.
That Pool You Need for Your Health
You can deduct the costs of your swimming pool — if you can make the case that it’s essential to your health. That was the case for Herbert Cherry, a Muttontown, N.Y., man suffering from emphysema who successfully argued that the backyard pool would be used for exercise that his doctor suggested would relieve his symptoms. He was able to secure deductions for the cost of operating and maintaining it.
There might not be a more glorious combination of two words in the English language, and the IRS is ready to acknowledge this. That’s right, you can get a tax deduction for giving away beer in specific contexts. The main case in question involved a gas station owned by Edward J. and Judy A. Sullivan that gave away beer as a way to attract customers. The owner argued that it was a business expense as he was using the beer for marketing and won the right to deduct its cost.
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