Posted by Michelson Law Office

6 Tax Breaks You’ll Lose On your 2018 Return

6 Tax Breaks You’ll Lose On your 2018 Return

You may be thinking of taking a tax break for the all the expenses you incurred at work, or trying to avoid any service charge from the tax preparer, sorry to give you this bad news; it is not possible. Why because there is tax legislation that oversees tax cuts and job acts, so there can be reduced itemized tax deductions.

This new tax legislation excludes personal exemptions, which can be valued for the sum of $4,050 for the taxpayer, the spouse, and each dependent as the case may be. This caused a significant increase in the deduction to the sum of $24,000 and $12,000 for married and single filers respectively.

The joint committee on taxation revealed that; the new law resulted in having fewer taxpayers with itemized deductions, leaving over 85% no choice than to opt in for the standard deduction.  This implies that below 25% of families in the United States are likely to itemize their deduction in the year 2019.

Below are six tax breaks you will probably lose in the year 2019 tax return.

1. State and local taxes

Do you reside in one of the most populous cities in the United States, like Texas, New York, California? If yes then you will pay your real estate taxes, property tax, state and local income levies. 

State and local tax deduction are also known as SALT; if you were able to capture some itemized tax deduction before the tax overhaul, it could be said that you successfully had a SALT. 

SALT value differs from state to state with the minimum cap at $10,000. 

I advise you bid those tax breaks farewell, for some time., because the new tax legislation places a $10,000 cap on SALT deductions for taxpayers, which can be detrimental to your finances especially for taxpayers living in high tax places.

The tax policy center revealed that over $22,000 was the average SALT deduction for taxpayers residing in New York city.

2. Charitable Donations

The IRS always rewards taxpayers who give towards a philanthropic cause.  Donations towards charity deduction can still be accessed even after tax overhaul. The significant difference is that how many people are ready to claim it. With the combination of higher standard deduction, it merely means fewer people will be itemizing their deduction on their 2019 tax returns. The IRS always rewards Philanthropist who gives generously. 

3. Theft and property damage

The old tax law/ legislation allows you to claim itemized deduction for stolen or damaged properties that were not reimbursed by the insurance company. Damages could include theft, fire accidents, vandalism and natural disasters.

You can claim casualty loses on all these casualties. If by the time you calculate your losses, and it exceeds 10% of your adjusted gross income. 

4. Medical and dental costs

Medical expenses deduction has been reduced due to tax overhaul. Lucky for you, you were able to claim health care support costs that was over 7.5% of your adjusted gross income.

5. Your Home office costs

A miscellaneous itemized tax deduction is well understood by those who know how to hide receipts.

Take for instance in the year 2018, before the tax overhaul; you were able to deduct unreimbursed employee cost, tax preparation charges, expenditure, miscellaneous and other charges, which is above 2% of your adjusted net income.

Employees who work from home are likely to feel this pain more, because it uses to be easy for them to sort out the utility, mortgage bills because they work from home, thereby reducing expenses.

Due to these new tax legislation, all these breaks are out of limit in the year 2019.

6. Interest On Home mortgage

Peradventure you were able to write off interest up to about $1 million as regards your mortgage debt.  You took out a line of credit or equity home loan, and you were able to subtract the interest you paid on loans, and it was amounting up to $100,000.

Then you are qualified to claim interest for up to about $750,000 in residency loans, which is the whole combination of the total loans you used in building or remodeling your home. Note the IRS has a law that you are only eligible for a break if you are using the money to renovate or build a new house.

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