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It’s been more than a year now since the Tax Cuts and Jobs Act became federal law, ushering in sweeping tax reform. But not until this tax season is it hitting home for many taxpayers.
Most changes in the tax law enacted on Dec. 22, 2017, took effect in tax year 2018. So, your 2018 return — the one due in April — is the first you will file under a host of new rules.
You will likely welcome some of these changes — like the five-figure standard deductions that we detailed in “3 Big Ways the Tax Overhaul Will Affect Your 2018 Tax Return.”
At the same time, you might be surprised by the number of tax breaks that you won’t be able to claim for 2018 due to tax reform.
The following tax deductions are among those to which you can say farewell, at least as far as your 2018 tax return is concerned.
1. Personal exemptions
For 2017, eligible taxpayers could claim an exemption for themselves and a spouse as well as exemptions for dependents. Each such exemption reduced taxable income by $4,050.
For 2018, however, there are no personal exemptions. Tax reform suspended them, basically meaning it made them temporarily unavailable.
Specifically, personal exemptions and many other tax breaks that were suspended by the Tax Cuts and Jobs Act will be unavailable for tax years 2018 through 2025.
2. Moving expenses
You cannot deduct moving expenses from your 2018 taxable income, either. Tax reform suspended this deduction for everyone except active-duty members of the U.S. armed forces who are ordered to relocate.
“During the suspension, no deduction is allowed for use of an automobile as part of a move,” states IRS Publication 5307, which outlines how tax reform impacts individuals and families in tax year 2018.
Tax reform also suspended the exclusion for qualified moving expense reimbursements for everyone but active-duty military members. So, if your employer reimbursed you for moving expenses in 2018, that reimbursement will be considered taxable income.
3. Casualty and theft losses
Tax reform modified the deduction for net casualty and theft losses, making it available only to taxpayers who suffered such losses that were attributed to a federally declared disaster.
Other requirements for this deduction remain in place, however.
“The loss must still exceed $100 per casualty and the net total loss must exceed 10 percent of your [adjusted gross income],” states Publication 5307.
4. Job-related expenses
Previously, folks who itemized their tax deductions could write off what the IRS refers to as miscellaneous deductions to the extent that they exceeded 2 percent of such taxpayers’ taxable income. But miscellaneous deductions are among those that have been suspended.
Miscellaneous deductions include unreimbursed employee expenses, such as:
- Union dues
- Business-related meals
- Business-related entertainment
- Business-related travel
So, if you paid for such expenses out of your own pocket in 2018 and were not reimbursed for them by your employer, you cannot write them off on your 2018 tax return.
5. Tax preparation fees
- The cost of tax preparation software programs
- The cost of tax publications
- Fees for filing tax returns electronically
So, if you paid any of these expenses in 2018, you can’t write them off on your 2018 return.
6. Certain investment expenses
Investment expenses — such as investment management fees and even safe deposit box fees — are also miscellaneous deductions and thus out of reach for 2018.
The same is true of fees associated with the collection of interest or dividends. This means fees that you pay to an agent such as a broker, bank or trustee to collect your taxable bond interest or stock dividends.
7. College athletic event seating rights
As recently as tax year 2017, if you made a payment to or for the benefit of a college or university and in return received the right to buy tickets for an athletic event in school’s stadium, you could deduct 80 percent of that payment as a charitable contribution.
This deduction has been repealed, however. So, starting with tax year 2018, no portion of such payments to a college or university can be considered tax-deductible charitable contributions.
What’s your take on how tax reform will impact your 2018 return? Sound off below or over on our Facebook page.