The new tax law has led to a number of changes in the tax structure in the United States. The changes went into effect in 2018 and will impact the 2018 tax filings. This means you can still make the most of the previous tax structure for your 2017 filings.
How to make the most of the previous tax structure? Take advantage of deductions before they disappear.
Not all deductions will remain in 2018. Three specific tax deductions to take advantage of that will disappear in 2018 include:
- Dependent deduction. A tax filer can deduct $4,050 per person under the personal and dependent deduction. This deduction is available for 2017 filings but will disappear in 2018. You could potentially take the deduction for a spouse, child or anyone else that can be claimed as a dependent.
- Miscellaneous itemized deductions. This deduction will also disappear. It can include unreimbursed work expenses and tax preparation fees. A note, in order to take this deduction the total must generally exceed 2 percent of the adjusted gross income for the year.
- Moving expenses. Did you move for your job? This deduction allows for moving expenses not reimbursed by an employer.
These are just three of the changes that result from the new tax law. An additional change that may impact your filings in the future is the increase to the standard deduction. This deduction will jump to $12,000 for an individual and $24,000 for married couples.
This may change your financial plans for 2018. One example: charitable donations. You may want to reconsider giving if the charitable donation was catalyzed by the tax deduction benefit.
What if my tax filings trigger contact from the IRS? Take any correspondence seriously if your tax filings trigger contact from the Internal Revenue Service (IRS). The contact may be the sign of an impending investigation into your filings. If this is the case, it is wise to start building a defense to any potential charges. An attorney can provide assistance in this matter.