As you prepare your tax return, you may find that some deductions you used to count on are no longer available, thanks to the federal tax overhaul passed in late 2017. Popular tax breaks that were eliminated or curbed include:
State and local property taxes
The tax overhaul capped the amount of state and local taxes you can deduct at $10,000. In the past, these taxes were generally fully deductible. This could increase the tax bill for residents of states with high state income and property taxes. In high-tax states such as California, the deduction for state and local taxes was often the largest deduction taxpayers claimed, says William Norwalk, tax partner with Sensiba San Filippo in San Francisco. Norwalk adds, though, that lower tax rates for high-income taxpayers could help offset the loss of the deduction.
Moving expenses
In the past, people who relocated for a job and paid the moving costs could deduct most of their expenses, even if they didn't itemize. The tax overhaul eliminated that deduction unless you're an active-duty member of the military.
Interest on home-equity loans
You can deduct interest on loans or lines of credit only if the money is used to buy, build or improve your home. If you use a home-equity line of credit to pay for college tuition, for example, the interest isn't deductible.
Alimony
If you're paying alimony under the terms of a divorce finalized or modified before Dec. 31, 2018, go ahead and deduct your payments (assuming you still itemize). For divorce agreements reached after Dec. 31, alimony is no longer deductible.
Miscellaneous itemized deductions
These deductions included the write-off for tax-preparation fees, investment fees and unreimbursed business expenses. Previously, taxpayers could deduct these expenses if they exceeded 2 percent of their adjusted gross income. This change could be particularly costly for employees with significant unreimbursed business expenses. An employee who drives a lot to visit clients -- and isn't reimbursed for the mileage -- could end up with a higher tax bill this year, particularly if the individual also pays state and local taxes that exceed $10,000, says Lisa Greene-Lewis, a certified public accountant with TurboTax. The change could also raise taxes for employees who work remotely and can no longer deduct the cost of maintaining a home office.(The tax law won't affect the ability of self-employed workers to claim a home-office deduction.)
Families with children (or other dependents) who are 17 or older could also end up paying more. The tax law provides a $500 credit for each dependent who is 17 or older. The income thresholds for this credit are the same as those for the child tax credit (couples with adjusted gross income of up to $400,000 and all other filers with AGI of up to $200,000), but the smaller credit may not be enough to offset the loss of the $4,050 personal exemption for dependents claimed on your tax return.
(Sandra Block is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to [email protected]. And for more on this and similar money topics, visit Kiplinger.com.)