The Tax Cuts and Jobs Act of 2017 (TCJA) made many important changes to the way Americans prepare their 2018 tax returns. By this time, you should already be collecting your documents and getting ready to file your taxes — after all, the earlier you file, the better (and here's why). But you need to remember that this year, the new tax laws have eliminated many itemized deductions you may have used on previous tax returns.
Here are seven tax deductions eliminated for your 2018 tax return.
1. Bicycle commuter benefit
Under the old law, employers could give employees who commute by bicycle up to $20 a month — or $240 a year — in tax-free reimbursements for bike repairs, maintenance and other related expenses. Under the new law, that benefit is phased out until 2026.
Considering riding your bike to work? This article breaks down if bike sharing is the best way to commute.
2. Mortgage interest paid on over $750,000 in home loans
Prior to the TCJA, homeowners could deduct all mortgage interest they paid on up to $1 million in home debt, which could be a sizeable tax deduction for many. Starting in 2018, the maximum amount of debt eligible for the deduction has been reduced to $750,000.
Older loans are grandfathered in — any mortgage secured prior to December 15, 2017 still abides by the old rules, according to Josh Zimmelman, owner of Westwood Tax & Consulting.
3. Home equity lines of credit not used for the home
Home equity lines of credit (HELOC), also known as home equity loans, are borrowed against the equity in your home and can be used for many reasons. Prior to 2018, the interest paid on HELOCs was tax deductible. Starting in 2018, home equity interest payments are only deductible if the loan is used for specific purposes.
“Homeowners used to be able to deduct interest paid on a home equity loan,” said Zimmelman. “Now, they can only deduct that interest if the loan was used to buy, build, repair or improve the home.”
4. Moving expenses
Previously, you could deduct some moving expenses if you met specific conditions, such as if your employer didn’t cover your expenses and you moved over a certain distance. Now, that deduction is reserved for the military.
“The previous law let taxpayers deduct moving expenses if they moved for work and their move met certain characteristics. However, now the only people who can take this deduction are military servicemembers moving for assignment,” said Zimmelman.
Getting ready to move? Here are eight hidden moving expenses to prepare for.
5. Personal casualty losses outside of disaster zones
Losses to your home, personal property or vehicles due to natural disaster or theft used to be deductible for amounts in excess of $100 (not counting any losses that insurance covers). Now, you can only deduct these losses if you live in a region that was federally declared a disaster area by the president.
6. SALT deductions over $10,000
The State and Local Tax (SALT) deduction allowed taxpayers to federally deduct their state and local taxes paid, including state property tax, local property tax, income tax and sales tax. Previously, that deduction was unlimited, but now it is capped at $10,000.
7. Miscellaneous itemized deductions
"The miscellaneous tax deduction can be taken for certain expenses if they total more than 2% of a taxpayer’s adjusted gross income," said Zimmelman. "In the past, these included tax preparation expenses, investment fees and unreimbursed work-related expenses. This year, all of these expenses cannot be claimed as itemized deductions anymore."
Remember, just because you have fewer itemized deductions doesn’t mean you’ll owe more to the government. At the same time it eliminated some itemized deductions, the TCJA also doubled the amount of the standard deduction for 2018 and beyond, which means far fewer Americans will bother with itemized deductions. If your itemized deductions don’t add up to more than the standard deduction, there’s no need to itemize.
Want more help with filing your taxes? Check out this guide on how to file taxes in 2019.
Image: Sharon McCutcheon