The Biggest 2018 Tax Changes to Know About Before the End of the Year
Sure, it’s not even New Year’s Eve yet, but the deadline to file 2018 taxes is looming (April 15, 2019, to be exact) and, with a bunch of tax reform changes to know about, a jump-start now could help you get more money back next year. We caught up with Lisa Greene Lewis, a CPA for TurboTax, to find out how to plan ahead—and save.
You Can No Longer Deduct Work-Related Expenses
Calling all full-time employees who previously have written off their mileage or travel fees for job-related speaking engagements: For your 2018 tax return, this is no longer a deductible expense for anyone with a W-2. (In other words, this doesn’t apply to freelancers or anyone self-employed.) Got a job without an expense account (but plenty of expenses)? Itemize everything you’ve shelled out for and meet with your boss to see if they can help you recoup some of that cash.
Or Moving Costs
Unless you’re active duty military, moving-related expenses due to work relocation (storage, pet transport, etc.) are no longer something you can deduct from your taxes for 2018. But again, see if you can negotiate for a portion of this expense to be covered by your employer.
There’s a New Cap on Home Mortgage Interest Deductions
For anyone who purchased a home after December 15, 2017, listen up: There’s a new limit to the amount of loan interest you can deduct. It used to be that you could deduct the interest on a home loan up to one million dollars. (Anyone that was a homeowner prior to December 15, 2017, is grandfathered into that cap.) Under the new tax laws, you can only deduct the interest for a loan up to $750,000.
And Deductions on Property Taxes, Too
The new law limits the amount of state and local property, income and sales taxes that can be deducted to $10,000. In the past, these taxes have generally all been fully tax-deductible. This means that a homeowner that has property taxes over $10,000 will not be able to deduct the full amount.
This is the Last Year You Can Write Off Your Divorce
Alimony payments are tax-deductible until the clock strikes December 31, 2018. This means that you may want to rush through any divorce settlements by end of year so that they still qualify. (Since spousal support is usually covered by the higher-earning spouse, a tax break made it possible to pay more—starting in 2019, that may no longer be the case, according to lawyers.)
Kids No Longer Count As a Dependent Exemption
Whether this is good news or bad news depends on your tax bracket and the age of your children. Here’s why: While the dependent exemption (the ability to count your kids as a dependent to the tune of $4,050 per head) went away, the child tax credit doubled (it’s now $2,000 versus $1,000). Since the child tax credit is a dollar for dollar reduction of taxes, that’s helpful. The dependent exemption amount comes off your income, but then that income is taxed at a certain rate.) But if your kids are 17 or older, you’ll no longer get a tax break.