In some ways, the tax reform bill passed by Congress this week stands to make filing federal income taxes a simpler process for the average person.
But one way the bill — ready to be signed into law by President Donald Trump — accomplishes this is by eliminating some itemized deductions after 2017.
Folks who lower their tax bill by claiming the standard deduction won’t be affected by the elimination of such deductions. But those who reduce their taxes by claiming multiple individual deductions — itemized deductions — will have fewer tax breaks to apply to their 2018 taxes.
In other words, if you itemize tax deductions, your 2017 tax return will be the last on which you can claim certain tax breaks.
H&R Block reports that, under the Tax Cuts and Jobs Act, the following four itemized deductions will end after tax year 2017:
- Employee business expenses
- Tax preparation fees
- Investment interest expenses
- Personal casualty and theft losses (with the exception of certain losses incurred in certain federally declared disaster areas)
So, anyone who itemizes their tax deductions and is eligible for any of those tax breaks in 2017 should make the most of them before Jan. 1.
Here’s a personal example: I just yelled at my husband to hurry up and go buy new boots for work. He’s overdue for a new pair but has been procrastinating on the errand.
The thing is, he works in a profession in which uniform-related expenses generally qualify as a tax-deductible employee work expense.
So, if he makes that purchase by Dec. 31, we may be able to write it off on our taxes by itemizing our deductions. But if he makes that purchase Jan. 1 or later, there’s no chance of us getting a tax write-off for it because the employee business expense deduction will no longer exist.
If you have work-related expenses that might be deductible, check out the Internal Revenue Service’s primer on employee business expenses or talk to your tax preparer.
If you’re unsure whether you would be better off claiming the standard deduction or itemizing for your 2017 taxes, you can learn more about the difference in “Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax Breaks.”
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