This includes deductions for unreimbursed employee expenses and tax preparation expenses. Job Expenses and Miscellaneous Deductions subject to 2% floor. Miscellaneous deductions which exceed 2% of your AGI will be eliminated for the tax years 2018 through 2025. The deduction for personal casualty and theft losses is repealed for the tax years 2018 through 2025 except for those losses attributable to a federal disaster as declared by the President (generally, this is meant to allow some relief for victims of Hurricanes Harvey, Irma, and Maria).įor more on casualty losses after a disaster, click here.ħ. It remains at a disappointing 14 cents per mile (for other mileage rates, click here).Ħ. What this means to taxpayers: Always get a receipt.Īnd if you follow me on Twitter, you already know that for some inexplicable reason, the charitable standard mileage rate will not be adjusted for inflation under tax reform. Those provisions are effective beginning in 2018.Įffective beginning in 2017, the provision which allows for an exception to the substantiation rule if the donee organization files a return is repealed. Two, taxpayers are no longer entitled to deduct payments made to a college or college athletic department (or similar) in exchange for college athletic event ticket or seating rights at a stadium. First, the percentage limit for charitable for cash donations by an individual taxpayer to public charities and certain other organizations increases from 50% to 60%. The rules are largely the same with a few changes. Charitable donations remain deductible under tax reform. It's even more complicated because beginning in 2026, the cap goes back up to $1,000,000, no matter when you took out the mortgage.Īnd here's where that definition is super important: For tax years 2018 through 2025, there is no deduction available for interest on home equity indebtedness.ĥ. For mortgages taken out before December 15, 2017, the limit is $1,000,000 ($500,000 for married taxpayers filing separately). ![]() Those distinctions are important (more in a moment) no matter what they're called by you or by the bank.Īs of December 15, 2017, there's a limit on acquisition indebtedness - your mortgage used to buy, build or improve your home - of $750,000 ($375,000 for married taxpayers filing separately). Home equity indebtedness is indebtedness other than acquisition indebtedness that is secured by a qualified residence. First, the definition of acquisition indebtedness is important: It's indebtedness that is incurred in acquiring, constructing, or substantially improving a qualified residence of the taxpayer and which secures the residence. So, first, the home mortgage interest deduction didn't disappear. There is not, to date, a similar restriction for property taxes.Ĥ. In other words, you can't pre-pay your 2018 state and local income taxes in 2017 to avoid the cap. This means that, for example, rental property - even if held individually and not in a separate entity - remains deductible and not subject to these limitations.Īnd yes, Congress already knows what you're planning, so amounts paid in 2017 for state or local income tax which is imposed for the 2018 tax year will be treated as paid in 2018. State, local, and foreign property taxes, and sales taxes which are deductible on Schedule C, Schedule E, or Schedule F are not capped. SALT caps. While SALT deductions remain in place, there is a cap on the aggregate, meaning that the amount that you are claiming for all state and local sales, income, and property taxes together may not exceed $10,000 ($5,000 for married taxpayers filing separately). Foreign real property taxes may not be deducted under this exception.ģ. ![]() Under tax reform, deductions for state and local sales, income, and property taxes normally deducted on a Schedule A remain in place but are limited (see #3 below). So assuming the same facts above, you can claim $2,000 as a deduction, or $5,000 in expenses less the floor (7.5% x $40,000 = $3,000).Īgain, unlike most of the provisions in the bill, the provision is effective retroactively to the beginning of this year - so you'll see this change on your 2017 and your 2018 tax returns.Ģ. Under tax reform, the 7.5% floor is back in place for two years beginning Januthat means that it applies to the 2017 tax year.
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