Be Sure You’re Not Counting On Deductions That Were Eliminated
Late last year the new tax bill went into effect and there have been a lot of changes made between then and now.
It’s important to review what changes are likely to have a great effect on many taxpayers.
Eliminated Deduction: Moving Expenses
Under the new tax law, if you moved for your job, your moving expenses are no longer tax deductible. This could be a big surprise for some of you. The only time a move is now tax deductible if for active-duty military personnel. So, if you moved during the year and didn’t negotiate a moving reimbursement with your employer, you may be out of luck. If you are planning a job related move in the future, be sure to negotiate expense reimbursement with your employer or know that you’ll be eating it.
Eliminated Deduction: Dependent Exemption
The kiddos are no longer good for a $4,050 tax exemption. Yep, that one has been wiped out. But there’s a little bit of good news. If you can send your kids to camp over the holidays while you have to work, you can get a Child and Dependent Care Credit up to $1,050 for one child and up to $2,100 for two or more kids. In addition, you get the Child Tax Credit which has doubled and is now $2,000 per dependent under 17. That’s how it goes, you win some, you lose some.
Eliminated Deduction: Unreimbursed Employee Expenses
Some employers reimburse their employees for continuing education. And, some don’t. Uncle Sam used to allow tax deductions for classes, but they no longer do. However, you might still be able to take advantage of education tax credits like the American Opportunity Tax Credit up to $2,500 or the Lifetime Learning Credit up to $2,000.
Check Your Flexible Spending Account
If you have a flexible spending account through your employer, check to see if your employer has adopted a grace period permitted by the IRS, that allows you to spend 2018 set-aside money as late as March 15, 2019. If not, you’ll want to hurry up and plan to spend the money in your account. While the advantage of having a flexible spending account is that the money that goes into the account avoids both income and Social Security taxes you have to use it all by end of year. If you don’t use it, that’s right, you lose it!
Guess who gets that unused money? Your employer.
One More Thing
Remember that Tax Cuts and Jobs Act almost doubled the standard deduction, so most taxpayers will be taking the standard deduction. This includes not itemizing charitable deductions. But if your tax deductions are right at the maximum which is $12,00 for single taxpayers and $24,000 for those who are married filing jointly, see if you can make any of the following moves before December 31st.
First, donate more to charity to push yourself over the new standard deduction amount and maximize your deductions. Secondly, bunch itemized deductions. Watch deductible expenses like medical expenses that are deductible at expenses over 7.5 percent of your adjusted gross income for 2018. If your medical expenses are getting close to the threshold but not quite there, schedule doctor visits you’ve been putting off.
Talk To A Tax Specialist
It might be useful to talk to a tax attorney to see if there are other moves you can make. Most important is to stay out of trouble with the IRS. If you are in IRS trouble and want to get out, that’s a good reason to call our offices. If you want to maximize your tax returns or get out of trouble with the IRS, give us a call.