1. MORTGAGE interest deduction has been lowered: Current homeowners can continue to deduct interest on loans of $1 million; however, new homeowners will be limited to interest on loans of $750,000.
2. State and local tax deduction is capped at $10,000: Yes, you can continue to deduct state and local taxes, but with a limit of $10,000. Old law allowed you to deduct an unlimited amount for state and local property taxes plus income or sales taxes.
3. Medical expenses are expanded: Deduction for medical expenses deductions not only survived; it even got expanded. Instead of deduction in excess over a threshold of 10%, you can deduct excess over 7.5%.
4. Teachers can continue to deduct classroom supplies up to $250: Educators can continue to deduct up to $250 when they spend their own money to buy classroom materials.
5. Moving expense deduction is gone: You can no longer deduct cost of moving (unless you are with the U.S. Armed Forces).
6. Most miscellaneous itemized expenses (unreimbursed auto, employee business expenses) are eliminated.
7 You can no longer deduct fees charged by a tax professionals or money spent on tax prep software.
8. Disaster deduction is gone: You can no longer deduct losses due to a fire, storm, or theft that are not covered by insurance (unless disaster was declared as a national disaster such as the recent California wildfires or Houston hurricanes).
9. Alimony payments deduction is gone: Here’s a double whammy – You can no longer deduct alimony payments to your beloved ex-spouse; your ex does not have to declare it either. Ouch! This provision will apply to couples who sign divorce or separation paperwork on or after January 1, 2019. You have time.
10. Tax breaks for adoption expenses are preserved.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].