Tax deductions are a great way to lower (or in some cases, eliminate) your taxable income, which can help keep more money in your pocket at tax time. With the passage of the Tax Cuts and Jobs Act of 2017, a number of popular tax deductions were either eliminated or limited. But don’t worry. The standard deduction nearly doubled to $12,000 if you are single and $24,000 if married filing jointly. Plus, there are still some tax deductions and credits you can take.
Here is a breakdown of the deductions taxpayers can still take, the ones that went away and what you can do to make up for the ones that disappeared this year.
[See: 15 Tax Questions — Answered.]
Which Deductions Can You Still Claim on Your 2018 Taxes?
While many popular deductions went away, there are still plenty of money-saving deductions that you can claim on taxes filed in 2019. As you gather your receipts and prepare to file your taxes this year, be sure to keep these eight tax deductions in mind.
— Mortgage-loan interest
— Property tax
— Self-employment deductions
— Educator expense
— Student loan interest
— Relocation deductions
— Charitable donations
— Medical expenses
Read on for additional information about each deduction.
[See: 10 Smart Ways to Spend Your Tax Refund.]
Deductions for Homeowners
— Mortgage-loan interest: If you have a mortgage, you can still deduct mortgage interest. Under the new tax law, if you purchased a new home after Dec. 15, 2017, you can deduct mortgage loan interest on a loan up to $750,000, or $375,000 if married and filing separately. Homes purchased before Dec. 15, 2017 are grandfathered in and can deduct mortgage interest based on a loan amount up to $1 million. The tax deduction for interest paid on home-equity loans and lines of credit used to buy, build or substantially improve a taxpayer’s home secured by their home is still tax-deductible, but interest paid on the same loan used for personal expenses such as paying off credit card debt is no longer tax deductible.
— Property tax: The provision that allowed you to once deduct all of your state and local income or sales tax and property taxes is now capped. You can still deduct property taxes, but state and local income or sales tax and property taxes can only be deducted up to $10,000 ($5,000 if married filing separately).
Work-Related Deductions
— Self-employment deductions: If you’re self-employed or an independent contractor, you may be able to claim expenses directly related to your business such as your home office, health insurance, education expenses or expenses related to business use of your car. There is also a new 20 percent qualified business income deduction in addition to the business expenses you are able to deduct.
— Educator expense: If you’re a teacher, you may be able to deduct up to $250 for unreimbursed school supplies you purchased.
Deductions for Students
— Student loan interest: If you’re still in school or paying off student loans, you may be able to deduct up to $2,500 of student loan interest even if you don’t itemize.
Deductions for Active Duty Military
— Relocation deductions: If you’re a member of the armed forces on active duty and you have to relocate for a permanent change of station, you may be able to deduct your unreimbursed moving expenses.
Other Deductions
— Charitable donations: If you itemize your deductions, you can subtract the expense of your charitable donation from your taxable income. In order to qualify for this deduction, your charitable donation must have been donated to a 501(c)(3) charitable organization and you must have formal evidence of your donation. You may also be able to deduct unreimbursed, volunteering-related expenses such as mileage driven to volunteer at 14 cents per mile.
— Medical expenses: If you, your spouse or dependent received medical, dental or hospital care, you may be able to deduct your medical expenses and lower your tax bill. In order to qualify, you also have to itemize your deductions and your deductible expenses have to be more than 7.5 percent of your adjusted gross income.
[See: 9 Red Flags That Could Trigger a Tax Audit.]
Which Tax Deductions Went Away?
— Dependent exemption. The dependent exemption that was $4,050 in tax year 2017 was eliminated, but you can still claim dependents in order to get other valuable credits that still exist, such as the child tax credit, which increased to $2,000, and a new $500 tax credit for non-children dependents.
— Moving expenses. Unreimbursed expenses for a job move went away unless you are active-duty military, but you can still negotiate with your employer to pay you back for your expenses.
— Casualty and theft losses. The new law preserves the deduction only for federally declared disasters and not casualty caused by an event such as a fire in your personal residence. If you have a casualty or theft not covered under the new law, make sure you file a claim with your insurance company as soon as possible, so you can be reimbursed.
— Unreimbursed employee expenses, including seminars, memberships and classes. If you are an employee, you used to be able to deduct unreimbursed expenses for travel to meetings outside your regular office and expenses such as seminar fees, but now those deductions are no longer available. If you still pay a lot for these expenses, negotiate with your employer to reimburse you.
Should You Take the Standard Deduction or Itemize?
According to TurboTax estimates, nearly 90 percent of taxpayers will now take the higher standard deduction instead of itemizing, which is up from an estimated 70 percent last year. While you may have itemized your tax deductions in the past, now you may benefit from taking the new higher standard deduction if the standard deduction amount for your filing status is more than your itemized tax deductions, especially when taking eliminated or lower itemized deductions into consideration.
When you’re sitting down to file your 2018 tax return, you’ll want to see if your deductible expenses exceed the standard deduction amount. If so, then itemizing would make the most sense. If not, the standard deduction is the way to go.
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8 Tax Deductions You Can Still Claim on Your 2018 Taxes originally appeared on usnews.com
