Taxes: Last chance for some deductions
If you haven’t filed your 2017 tax return yet, “grab these breaks while you still can,” said Darla Mercado in CNBC.com. This year’s April 17 filing deadline marks the close of the last tax season before sweeping new rules commence, and a slate of itemized deductions is on the way out. Starting next year, deductions for state and local taxes will be capped at $10,000, a change that will be felt keenly by residents of high-tax states and owners of multiple homes. Mortgage-insurance premiums and interest on some home equity loans will also be nondeductible after 2017. And this is the last year that you can still deduct moving expenses, as long as you relocated more than 50 miles for work and are employed full-time. Unreimbursed work expenses are also off the deduction list next year, said Kelly Phillips Erb in Forbes.com. That includes “miscellaneous” expenses like tools, supplies, work uniforms and any dues, subscriptions, or other work-related costs.
Getting rid of these deductions is supposed to “simplify the tax-filing procedure,” said Ann Brenoff in HuffingtonPost.com. But for this year at least, “there are a multitude of things that can be deducted if you are able to show how they benefited your business.” Consider the things you spent money on last year that helped you do your job better in any way. “A freelance journalist can claim a deduction for a cable news subscription; a bodybuilder can deduct the body oil he used in competition.” And if you spent time looking for a job last year, you can deduct related expenses “if you’re seeking work in the same field and your job-hunting expenses exceed 2 percent of your adjusted gross income.” That includes travel to interviews and printing costs. Don’t forget to claim any fees from your tax preparer this year, said Jeanne Sahadi in CNN.com. “This deduction, like all miscellaneous deductions, is eliminated under the new law.”
“Probably the main change that affects some taxpayers this filing season is a more favorable rule for deducting medical expenses,” said Russ Wiles in AZCentral.com. People who itemize can deduct medical costs above 7.5 percent of adjusted gross income for both their 2017 and 2018 returns. “In 2019, that rises to 10 percent, making fewer expenses deductible.” And if you are planning to buy a house this year, know that interest will be deductible only up to $750,000 in mortgage debt starting on your 2018 return, down from a prior cap of $1 million. All of these changes might make this your last tax return with itemized deductions. Starting next year, the standard deduction will rise to $12,000 for individuals and $24,000 for couples, so “more individuals and married couples will have reason to take the standard deduction rather than itemize.”