Featured News

More Articles  Printer Friendly Version

 

7 Tax Breaks Eliminated Or Curtailed

The Tax Cuts and Jobs Act became effective in 2018 and delivered lots of good news, such as curbing of the alternative minimum tax and lowering tax brackets. However, in filing your federal return for the first time under the new rules, be aware that these seven popular tax breaks disappeared or were curtailed.

Personal exemptions. This longstanding break was axed, and for many it won't be missed because of a near-doubling of the standard deduction to $12,000 for individuals, $18,000 for heads of household and $24,000 for joint filers. The personal exemption was $4,056. This was not technically a deduction, which you subtract from your taxable income; as an exemption, it was a dollar-for-dollar reduction of your tax bill. For a single parent with, say, three children—who would get the standard deduction of $18,000—the personal exemption might have been a better deal unless the standard deduction didn't put the parent in a lower tax bracket. Partly offsetting the loss of the personal exemption is the increase of the child tax credit to $2,000 from $1,000.

Unlimited home equity loan interest deduction. Through 2017, you could deduct interest on a loan you took out to buy a boat, fund a vacation or for any endeavor not related to real estate. No more. Now, the loan must be connected to home improvement. What's more, the total of the mortgage and the home equity loan can't be more than $750,000.

Unrestricted state and local tax (SALT) deductions. This is a big deal for residents of states like New York and California, which have both high property taxes and hefty state income taxes. Before the TCJA, these levies could be deducted from a federal return, no matter how lofty they were. For the 2018 tax year, however, the so-called SALT write-offs are capped at $10,000. In California, the average SALT deduction had been $20,000.

Unreimbursed employee expenses deduction. It used to be that you could deduct any job-related payment from your own wallet that was above 2% of adjusted gross income, provided that your employer didn't pay you back. That deduction is gone.

Moving expense deduction. Under the old law, you could deduct moving costs if the relocation was job-related. It had to be 50 miles farther from your previous home than the distance between the old place and the old job. The new law restricts moving deductions to people in the military.

Unlimited natural disaster deductions. 2018 was a bad year for natural disasters, with hurricanes and wildfires wrecking lives and destroying homes. You used to be able to deduct a portion of the damages. Now, that is allowed only if you live in an area that's designated as a presidential disaster zone.

Alimony deduction. In the past, if you were the alimony payer, you could deduct the payment from your federal taxes. But for those getting divorced in 2019, that can no longer happen. The old rules still apply to divorces prior to this year.

With April 17, 2019 filing deadline fast approaching and this being the first return to be filed under the new rules under eliminating or curtailing these deductions, we are here to answer any questions about how these changes affect your personal situation.


Email this article to a friend


Index
How Long Does It Take To Be A Long-Term Investor?
Five Observations About The CBO's New Long-Term Debt Forecast
Fed Apology, Strong Job Growth Bolster Stocks
Be Prepared For Tax Policy To Swing Back
Despite Grim Headlines, Economic Growth Is Intact
Business Owners: Avert Obstacles To Tax Savings
Despite December Turbulence, Economy And Business Optimism Were Strong
Latest Forecasts Show Economy Is Doing Okay
A Poignant Moment In Financial History Sparks Stocks
Sun Starts Setting On Solar Tax Credit From Uncle Sam
'Twas The Last Trading Day Before Christmas
Stocks Plunge When Investors Earn The Equity Risk Premium
Stock Plunge Nears Bear Territory After Fed Hike
HSA Or FSA: Which Is Better For Medical Savings?
A Last-Minute Reminder To Give Wisely And Charitably

This article was written by a professional financial journalist for Blattel & Associates and is not intended as legal or investment advice.

©2019 Advisor Products Inc. All Rights Reserved.

The articles and opinions on this site are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your advisor with regard to your individual situation.
All summaries/prices/quotes/statistics presented here have been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. Past performance is no guarantee of future results.
When you access certain links on the Blattel & Associates website you may leave this website. We do not endorse the content of such websites nor the products, services or other items offered through such websites. Any links to other sites are not intended as referrals or endorsements, but are merely provided to the users of the Blattel & Associates website for convenience and informational purposes.
Robert Blattel is a CERTIFIED FINANCIAL PLANNERTM practitioner. The partners of Blattel & Associates are not registered in all states. Please contact us to verify availability in your state. This is not an offer to buy or sell any security.
CFP® and CERTIFIED FINANCIAL PLANNERTM are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.
Securities and Investment Advisory Services offered through Cutter & Company Brokerage, Inc., 15415 Clayton Road, Ballwin, Missouri 63011 * (636) 537-8770. Member FINRA/SIPC.
Privacy Policy can be read at http://www.cutterco.com/privacypolicy.htm.