When you sit down to do your 2017 taxes, you’ll be taking a nostalgia trip of sorts. The tax bill signed into law late last year eliminated some potentially valuable deductions starting in 2018. So your 2017 return may be your last chance to benefit from those write-offs, many of which are easy to overlook in the first place.
For your 2018 tax return that you’ll file next year, a nearly doubled standard deduction may make up for lost write-offs. But until then, don’t miss out on the tax savings you deserve.
The new tax law also made it easier (but not easy) to claim one type of deduction for your 2017 taxes — medical expenses.
Here’s a rundown of the deductions you’ll want to claim if you can:
1. Unreimbursed Employee Expenses
You may be able to deduct unreimbursed employee expenses on your 2017 return (but not after that). But there’s a big catch: The expenses will be deductible only to the extent that they, along with other miscellaneous expenses such as tax prep and investment advisory fees, exceeded 2 percent of your adjusted gross income. That’s potentially a high bar to clear.
“It’s the last hurrah for these types of things,” says Jeffrey Levine, CEO and director of financial planning at Blueprint Wealth Alliance in Garden City, N.Y.
A lot of unreimbursed employee expenses can fit under this umbrella, however. Some examples: uniforms and tools you had to buy for your job, home office equipment your boss didn’t reimburse you for, union dues, subscriptions to professional publications and business trips you took on your own dime.
2. Job-Search Expenses
If you dished out a lot of money to look for a job in 2017, you may be able to deduct some of the costs of your quest. A few examples: out-of-town trips for interviews, mileage driving to meetings (53.5 cents a mile), fees for outplacement agencies, resumé prep and registration fees for events related to your line of work.
“Even if you didn’t secure the job, you can take the deduction,” says Lisa Greene-Lewis, a CPA with TurboTax.
Three caveats: 1) The search in 2017 couldn’t have been for your first job; 2) You must have been looking in the same field you were already in and 3) You can only claim the expenses if they, and other potentially deductible miscellaneous expenses, exceeded 2 percent of your adjusted gross income. Still, with miscellaneous deductions a casualty of the new tax law, your 2017 return is your last chance to try.
3. Moving Costs for a New Job
If you landed a job last year that required you to pick up roots, your timing was excellent, tax-wise. The deduction for moving expenses for a new job also got the ax starting in 2018. Plus, beginning this year, any moving costs your new employer reimburses you for are taxable (that perk used to be tax-free).
To qualify for this deduction, however, you must meet what the Internal Revenue Service (IRS) calls the “distance test.” Your new workplace must be at least 50 miles farther from your old home as your previous one was from your former home. In other words, if where you used to work was 10 miles from home, your new job must be at least 60 miles from that same home.
4. State and Local Taxes
The deduction for state and local income, sales, and property taxes hasn’t gone away entirely, but in 2018 the maximum you can write off is $10,000 in total.
If you stood in line in late December to prepay your 2018 property taxes due to the new tax law, you likely won’t forget that. What’s easier to overlook are the state income taxes you paid last spring with your 2016 return.
Plus, if you live in a state with no or low income taxes, don’t overlook the state sales tax deduction, an alternative to deducting state sales taxes. The IRS will calculate how big of a deduction you can take based on your area and income, but you can add to that amount the actual sales taxes you paid in 2017 on a big-ticket purchase like a boat or car.
5. Casualty and Theft Losses
If your car was stolen or your home was broken into or damaged in a disaster last year, you can write off damages not covered by insurance or recouped in a salvage sale. Between hurricanes, floods and wildfires, 2017 was a big year for disasters, of course.
However, unless you have the misfortune to live in a federally-declared disaster area, you won’t be able to deduct casualty and theft losses after 2017. Given that, advises Cari Weston, director of tax practice and ethics for the American Institute of Certified Public Accountants, you might want to revisit your insurance coverage now to leave yourself fewer gaps down the road.
6. Dependent Exemption
The 2017 tax law killed off personal exemptions starting in 2018, replacing them with a nearly-doubled standard deduction. So for 2017, you can take exemptions worth $4,050, for yourself and your dependents. What you might overlook when totting up your dependents are any family members who you supported last year but didn’t live with you.
For a relative to qualify — an adult child, a parent, a sibling — you had to supply more than half that person’s support and his or her 2017 gross income could not have been above $4,050 (excluding, in most cases, Social Security income).
“A lot of people are paying more than half of expenses for a parent,” notes Brian Ashcraft, director of compliance of Liberty Tax Service.
7. The Deduction That Expanded: Medical Expenses
Although the new tax law ended many write-offs, it expanded the deduction for medical expenses, at least for 2017 and 2018. For those tax returns, the threshold for qualifying to deduct medical expenses fell from 10 percent of your adjusted gross income to 7.5 percent. That’s still a tough hurdle to clear, but the drop could make a difference.
“If you got in the habit of not adding it up, do it now,” says Weston.
Aside from out-of-pocket health and dental costs, eligible medical expenses include home improvements related to health care, such as adding rails, grab bars or a stair lift.
Next Avenue Editors Also Recommend:
- Tax Audits: Your 10 Biggest Questions Answered
- 5 Questions to Ask Your Estate Planner After the New Tax Law
- Secrets of Claiming a Home-Office Deduction
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