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Your Guide to This Year's Tax Deduction Changes |
The tax season of 2019 begins at the end of January, but taxpayers will no longer be able to rely on five important exemptions that have saved them money in previous years, thanks to the Tax and Employment Cuts Act, which became federal law by more than a year. make. In addition, there is a new limit of $ 10,000 on state and local tax exemptions (SALT) and a $ 750,000 limit on mortgage interest deductions, all of which adds to a new fiscal landscape for you to navigate this year. This is what you (or whoever prepares your taxes) should know to avoid an unpleasant surprise from the IRS.
Tax deduction # 1: personal exemptions.
The amounts of the standard deduction have increased for income taxpayers from 2018 to $ 12,000 for individuals, $ 18,000 for heads of families and $ 24,000 for married couples filing a joint return (and spouses who have survived death). of your partner). Despite the increase, there is a trap. Last year, eligible taxpayers could claim a tax exemption of $ 4,150 for themselves, their spouse and their eligible dependents. As of the 2019 fiscal season, there are no personal exemptions. The Tax and Employment Cuts Act suspended them for fiscal years 2018 to 2025.
In other words, in 2017, a married couple with an adjusted gross income of $ 75,000 and two children would have had a total of $ 16,600 in personal exemptions in 2018 (or $ 4,150 per person). That adds up to the standard deduction of $ 12,700 that the couple would have received for filing a joint return that year. This year that same couple can claim $ 0 in personal exemptions. Some experts say that the increase in the child tax credit will compensate the loss of personal exemptions, but it will not help everyone, especially if their dependent children are over 16 during the fiscal year, which disqualifies them from the tax credit for children.
Standard Deduction Change since 2017 Your file status 2017 2018 Single $ 6,350 $ 12,000 Married filing separately $ 6,350 $ 12,000 Married filing joint return $ 12,700 $ 24,000 Head of household $ 9,350 $ 18,000 Deduction of tax # 2: Expenses of moving
Taxpayers will no longer be able to deduct moving expenses from their taxable income for 2018, with the exception of active duty members of the US armed forces. UU That they have to relocate. Then, if your employer reimbursed you for moving expenses in 2018, that refund will be considered taxable income.
Tax deduction # 3: interest on home equity loans
The mortgage credit line of the credit interest deduction is gone. That means that if you have an existing home equity loan, you can not deduct the interest from your taxes, unless you can connect it to the home improvements.
Tax deduction # 4: work-related out-of-pocket expenses
Deductions from various taxes for work-related expenses have been suspended under the TCJA. This includes expenses not reimbursed by employees, such as union dues, uniforms, education expenses for qualified employees, and travel, meals, and entertainment related to the business. So, if you paid any expenses related to work out of your pocket in 2018, you will not be lucky.
Tax deduction # 5: losses due to accidents and thefts.
The Tax and Employment Cuts Act amended the tax deduction for losses due to accidents and theft, limiting it only to taxpayers who suffered losses as a result of a disaster declared by the federal government. The loss must exceed $ 100 per victim and the total net loss must exceed 10% of your adjusted gross income, according to the IRS.
Tax deduction # 6: $ 750,000 mortgage interest.
Last year, taxpayers were able to deduct interest on a mortgage of up to $ 1 million. As of fiscal year 2018, only interest on the value of the mortgage with a maximum limit of $ 750,000 will be deductible.
Tax deduction # 7: SAL deductions
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