Tax Changes you need to know for 2018 : GKM Inc – Blog

Tax Changes you need to know for 2018

Posted by:   |  Jul 17, 2018  | Post comments

The new tax reform bill is now law, and taxpayers can expect a lot of changes to take place in 2018. Reduced tax rates, higher standard deductions, and higher child tax credits for families are just a few of the perks that individual taxpayers will see next year.
To pay for these tax breaks, however, lawmakers took away many deductions that millions of taxpayers had used every year to reduce their tax bills. Taxpayers will have to look closely at their own personal situations to see whether other, less common deductions are also going away.
Personal exemptions – The biggest move that the tax reform bill made was to take away personal exemptions, which generally allowed taxpayers to reduce their taxable income by $4,050 per person.
Home equity loan interest – Mortgage interest on purchase loans is still deductible under tax reform up to $750,000, but the deduction for interest on home equity loans becomes nondeductible once 2018 begins.
Moving expenses – Taxpayers will not be allowed to deduct moving expenses, as they can for 2017. To be deductible, a move had to be motivated by a job change, with the new job being at least 50 miles further from where you used to live than your old job was.
Casualty and theft losses except in disaster areas – Casualty losses under old law were eligible as itemized deductions to the extent that they exceeded $100 plus 10% of your adjusted gross income. Events included not only natural disasters but also fires, robberies, and other qualifying occurrences. The new law now preserves the deduction only for disasters for which a presidential disaster area declaration was made.
Job expenses – Money spent on certain job costs, such as license and regulatory fees, required medical tests, and unreimbursed continuing education, was available as an itemized deduction to the extent that it and other miscellaneous deductions exceeded 2% of the adjusted gross income. Now, these costs are not deductible any more.
Subsidized parking and transit reimbursement – Employees were eligible under old tax law to get up to $255 per month from their employers to subsidize parking costs or transit passes. Workers did not have to include those perks in income, and companies could deduct it. Now, the corporate deduction for that cost will go away.
Tax preparation fees – Just like job expenses, costs to have one’s taxes done were also available as miscellaneous itemized deductions. That will not be the case anymore, and any costs for tax preparation will be nondeductible in 2018.
Other miscellaneous deductions – A host of other miscellaneous deductions subject to the 2% AGI limitation will all be gone in 2018. These include investment fees and expenses, convenience fees for using a credit or debit card to pay one’s taxes, and trustee fees for an IRA if paid separately.
Donations to colleges in exchange for athletic event seats
One controversial provision allowed donors to give money to colleges and deduct the full amount, even if they got back tickets or seating rights to athletic events. That perk will go away, and donors will have to reduce their deductions by the value of those tickets.
If you have any of these deductions, do what you can to get them into the 2017 tax year. That way, you can claim them one last time before they are no longer available in 2018.