31 Dec CHAIR SIX LISTS – Six tax breaks set to expire tonight!
President Trump signed the Tax Cuts and Jobs Act (or, is that the 2017 Budget Reconciliation Act?) on December 22, 2017. Most of the provisions will take effect on January 1, 2018—and the tax code is set to change quite significantly. We’re counting off our favorite tax deductions that are expiring tonight, December 31, at the stroke of midnight. RIP.
Number 1: Personal Exemptions
Starting January 1, 2018, there are no personal exemptions. Congress lowered rates, increased the standard deduction, and enhanced the child tax credit. But those tax benefits may not help a couple with two or three dependents over the age of 16. Personal exemptions, we will miss you.
Number 2: Moving Expenses
Moving expenses in excess of any employer reimbursements are no longer deductible as an above the line deduction (unless, in certain circumstances, for members of the Armed Forces on active duty who move pursuant to a military order). This deduction was a nice benefit for employees who needed to relocate for their job or self-employed individuals setting up shop in a new state. It was above-the-line so the taxpayer didn’t even have to itemize. Sayonara, Moving Expense deduction.
Number 3: Home Equity Mortgage Deduction
The deduction for interest paid on acquisition indebtedness remains, but is limited to interest on $750,000 of debt for homes purchased after December 15, 2017. However, the home equity mortgage interest deduction is gone completely! That was a nice way to turn consumer debt into tax deductible debt, assuming the taxpayer had home equity. Or to make interfamily loans tax deductible—we would just secure the loan with a principal residence and record it with the county. But alas, no more. So, so sad. Ciao!
Number 4: Job expenses and miscellaneous itemized deductions subject to the 2% floor
Tax preparation fees and investment management fees are both gone. However, you can still pay your investment fees related to a retirement account through the retirement account, so those fees will remain pre-tax. But anyone with a taxable account paying high fees to some salesperson might want to consider how much value they are getting for their money. Also, unreimbursed job expenses are no longer deductible!!! This includes home office expenses, dues and subscriptions, union dues, travel, and other job-related expenses. No more tracking your business miles unless your self-employed or a business owner! Hopefully businesses will be more likely to reimburse employees for business expenses, but who knows? Bu-bye.
Number 5: State and Local Tax (SALT) Cap
While SALT deductions remain, they are capped at $10,000 per year for married filing joint. Any excess is no longer deductible. This is a bit of a problem for taxpayers in high tax states that were not otherwise subjected to the alternative minimum tax—but reduced rates and a higher AMT exemption and phaseout should mitigate this. We will miss you, SALT deductions.
Number 6: Casualty and Theft Loss Deduction
The deduction for personal casualty and theft losses has been eliminated unless those losses are attributable to a federally declared disaster. So, no more deducting ponzi losses! I’m no fan of this at all! Why no deduction for a theft loss? Come on, Congress! It just isn’t fair…RIP causality losses.
So, what do you think? Any tax deductions not included that you’re going to miss? Let us know in the comments!