However, beginning in 2018, “employees will not be allowed to deduct out-of-pocket work expenses they pay to do their job,” Simmons said. This deduction, along with other miscellaneous deductions, is suspended through 2025. 8. Tax preparation fees.
The new tax law reduced the amount taxpayers can claim for taxes paid to agencies that are not the IRS, according to Arthur Rosatti, an attorney with Ashley F. Morgan Law. These are typically called SALT, or state and local taxes.
The Tax Cuts and Jobs Act, which passed in December 2017, involved some of the most sweeping changes to the U.S. tax system in more than 30 years. And Americans will experience the effects of those changes when they file taxes for 2018. “Many itemized deductions ... will be capped, eliminated or otherwise diluted in power,” said Ben Flood, ...
1. Child Tax Credit. Families might be able to offset some of the personal exemption loss with the revised Child Tax Credit, which is now worth up to $2,000 in 2018. “Congress also raised the income threshold to $200,000 (for single filers) before the credit starts to phase out,” Rosatti said.
A personal exemption is a sum of money you can deduct for yourself and any dependents from your taxable income. The personal exemption was worth $4,050 in 2017. A family of four, for example, would have received $16,200 in exemptions last year.
Before the new tax law, homeowners could deduct interest paid on a home equity loan or line, or credit of up to $100,000, regardless of how the funds were used. For example, if a homeowner used a home equity loan to pay off credit card debt, they’d receive a tax break on the interest paid.
This was an “above-the-line” deduction, meaning it could be claimed even if the taxpayer didn’t itemize.