With the 2017 tax filing season upon us & the new tax reform bill passed you may find yourself questioning “What does it all mean?!” Look no further – below are the top things to make sure you take advantage of when you file your 2017 return before they disappear forever (OK – not forever, but at least several years).
Reduce your taxable income without itemizing! This is the last year you can claim the $4,050 personal exemption (usually applicable to yourself, your spouse, and each qualifying dependent). Although this will be missing from your return next year, the reform has attempted to make up for it with a doubled standard deduction, increases in other existing deductions, and a completely new credit. (For more on personal exemptions, click here.)
Did you make a move for your job this year? If you did and you meet the distance and length of service requirements you can claim them in 2017 – but you won’t be able to in the future. To learn more about qualifying moving expenses, click here: IRS Publication 521.
Home Equity Loans, Mortgage Interest, and Property
- This will be the last year you will be allowed to take the interest on up to $100,000 in home equity debt. There is no grandfathering provision on this one, starting next year this itemized deduction will be completely gone.
- The mortgage interest on your house up to $1 million will be allowed for 2017 – but going forward the limit has been reduced to $750,000. No, this one is not disappearing, but it is decreasing a significant amount. Note: There is a grandfathering provision that allows homes purchased in 2017 and before to continue to claim up to $1 million.
- Claim your property taxes in full! Starting next year property tax deductions will be part of a grouping with a combined limit of $10,000.
State and Local Income Tax
Another one that isn’t saying goodbye, but is being reduced. While the 2017 deduction is unlimited, starting in 2018 this will fall into the combined $10,000 limit – that is your property tax, state and local income tax, and sales tax deductions cannot exceed $10,000 combined – so make sure to take advantage of this, especially those of you in high-tax states!
A number of those miscellaneous deductions that may be a pain to itemize, but are nice to have will be going away – tax preparation fees, unreimbursed employee expenses, job search costs, etc., – don’t forget these on your return and save while you can!
As you can see, with the New Year comes a lot of new changes. Make sure to take advantage of these as well as those deductions that aren’t changing (student loan interest, medical expenses, classroom supplies, electric cars, etc.) on your 2017 return.
We also encourage you to get educated on what’s to come – read the 2018 Tax Cuts and Jobs Act here.
Don’t forget: 2017 tax filing season begins January 29th – Good luck and happy savings!