As the tax deadline grows closer, tax experts are reminding the public big changes are in store — it’s not only imperative to get your taxes finished ahead of the April 17 deadline, but to discuss changes in the tax code that may alter how you should be manage your money in 2018.
A handful of large deductions are disappearing, while the standard deduction is nearly doubling for next year’s tax deadline. What does it mean? According to Rick Bloom, a tax expert with Bloom Assets Management, more people will no longer need to keep receipts to itemize. It also means those who have complicated tax returns may need to make changes.
“I’ll give you an example: if someone is over 70, they have to take minimum required distributions from their IRA,” said Bloom. “Well, with the standard deduction being $24,000 those people may find their charitable donations are no longer tax deductible, but if they donate part of their minimum required distributions they save money — it’s important to know the tax law and how to work with it.”
That’s why Bloom said if you’re itemizing deductions for 2017, it’s worth sitting down with a tax professional to see if you need to make day-to-day changes to avoid issues next year.
“I think the average person will do better under this tax law for a lot of reasons,” said Bloom. “I think, if nothing more, when you don’t have to save receipts and do all this stuff filing your tax return is easier.”
DISAPPEARING TAX DEDUCTIONS
While Bloom said the increase in the standard deduction could make it easier for some people to file, it’s important to note that a number of deductions that helped are disappearing. For some people, the disappearing deductions will be offset by new codes — reinforcing the idea that taxes aren’t a “once-a-year” thought, but something that should be paid attention to throughout the year.
- Moving Expenses: If your move was work-related in 2017 you could deduct your moving expenses if your new job took you at least 50 miles away. An exception for military families will still exist, but the deduction disappears in 2018.
- Unreimbursed employee expenses: If your bosses don’t repay your job expenses you’ve been able to get a tax break for the costs in the past — that deduction disappears as the Tax Cuts and Jobs Act kicks in. Teachers still get an exception for the first $250 they spend.
- Miscellaneous itemized deductions: Little deductions add up quickly, but this deduction will also disappear after this year — miscellaneous itemized deductions allowed you to claim things like union fees, mileage to-and-from interviews, and other career services (to name a few). That said, experts note that since the standard deduction has nearly doubled this disappearing deduction may be a blip in the radar for some filers.