Top 15 Tax Deductions for 2018
Another new year, another new beginning! Congratulations you have made it through one of the craziest years on record I do believe. And now it is time to pay your taxes! This blog is all about saving money, and hence it is important to do everything you can to understand how to save money on your taxes in 2018. So, here we bring to you a compilation of all the tax deductions you never knew existed. My hope is that we can save you a bundle this year and for years to come.
1. Charitable Donations
Donations to a qualified charitable association are deductible (qualified associations ought to have the capacity to give you evidence of your donation). Ensure that you can supply every single vital receipt or affirmation letters to the IRS in the event you get audited. In the event that you get any merchandise or gifts in return, subtract the estimated value of the products and benefits from the donated sum.
For donations in the year 2017, you may deduct gifts worth up to half of your salary. Starting one year from now, this maximum deduction level will be raised to 60% for everyone. We have the Tax Cuts and Jobs Act (TCJA) to thanks for this. The new law wipes out your capacity to deduct gifts made to a school in return for the privilege to purchase athletic tickets. So, keep that in mind if you have used that trick in the past to “double dip.”
2. Therapeutic and Dental Expenses
You can deduct the measure of your unreimbursed restorative and dental costs that surpass 7.5% of your Adjusted Gross Income (AGI). For instance, if your AGI is $50,000, you may deduct the amount of your medicinal costs over $3,750. Under the TCJA, this limit will increment to 10% of your AGI in tax year 2019.
3. Performing Artist Expenses
Are you the cliché starving craftsman or artist? If so then you are in luck – at least when it comes to your taxes. Certain unreimbursed business costs of performing craftsmen, artists, reservists, and charge premise government authorities are dealt with independently from other deductible business costs. See the guidelines for Form 2106, “Worker Business Expenses” for points of interest. This tax assessment season is the last time you will have the capacity to claim this deduction, as it has been killed totally under the TCJA.
4. Tax Preparation Fees
Generally, you can deduct expenses that are associated with your tax statement preparation. This implies that on your 2017 return, you can deduct the expenses brought about in 2017 for setting up your 2016 return. Charges for tax software, time required to complete the tax return, and electronic recording expenses can all be included in this deduction. Caution – the TCJA has removed this finding starting in tax year 2018.
5. Home loan Interest, Points, and Insurance
The home loan interest that you pay on your home, and also points (a part of the loan fee you paid to lower your APR), might be deductible on the off chance that you meet the criteria recorded in IRS Publication 936, “Home Interest Mortgage Deduction.” This applies to contract obligation of up to $1 million for home credits taken before December 15, 2017, and home loans of up to $750,000 taken after that date. Home loan protection premiums additionally qualify through tax assessment year 2017, yet they begin phasing out starting at $100,000 AGI (for married filing jointly status).
6. Home Equity Loans
Interest on home value obligation of up to $100,000 can be deducted in the tax year 2017. For tax year 2018, specialists say enthusiasm on HELOCs should increase. The deduction given to property holders that utilize the returns of the credit to make home improvements can work on the primary home loan in addition to the HELOC if it does not surpass $750,000.
7. Betting Losses
Was it an awful year for you at the golf course yet a decent year with lottery tickets? Believe it or not, the IRS allows you to deduct betting losses with adequate documentation. However, this only works to the degree that you counterbalance other betting wins/gains.
8. Land and Personal Property Taxes
Generally, charges that are required through the possession of a home (for example land property tax) are deductible.
9. State/Local Taxes
You can deduct your state and local tax expenses paid in the earlier year. For the 2018 tax year, the TCJA keeps this deduction, however it confines the aggregate deductible measure of wage, local taxes, and property assessments to $10,000! This is a big deal to many, so make sure you take this into account going forward.
10. Job Hunting Expenses
If you are searching for another job and meet other criteria in IRS Publication 529,”Various Deductions,” you may deduct certain Job hunting costs (for example, traveling to interviews – regardless of whether you land the position). For the tax year 2018, this deduction goes away thanks to the TCJA.
11. Moving Expenses
If you had success in the above quest for new employment and find you must move, then you are in luck. If your move for new employment is more than fifty more miles from your present home, you can deduct some moving costs. See Publication 521, “Moving Expenses” for subtle elements of what you can and cannot deduct. Once again, for 2018 and beyond the Tax Cuts and Jobs Act (TCJA) gets rid of these deductions.
12. Retirement Plan Contributions
Contributions to proper retirement accounts (traditional IRA, 401(k), and the like) are generally tax deductible. Roth IRAs are not since they are financed with post-taxed dollars. This tax deduction continues going forward with the TCJA (thank goodness)! This is one of the best ways to save for your retirement and also get a fat tax break in the process. So, make sure you take full advantage of it!
13. Divorce settlement
Amounts that you pay to a previous life partner, not including child support, might be deductible on your taxes. See Tax Topic 452 for points of interest. The alimony support stays through 2018, yet vanishes for couples separated in 2019 or after. Could we see increased divorce rates in 2018 just because of this rule change???
14. Health Savings Account Deductions
Your 2017 commitments to your Health Savings Account (HSA) are deductible, in spite of the fact that business commitments are definitely not. To qualify, you should be secured by a high deductible health plan (HDHP) and have no other health insurance.
15. Self-Employment Expenses
As an independently employed individual, you pay both the business and self-employment segment of income tax charges. Luckily, you get to deduct your business expenses – so why not start an online business now for cheap? If you are self-employed, you can likewise deduct retirement contributions and medical coverage costs. Take all the deductions that apply to you. If you need assistance, our tax professionals will be glad to help.
Final Thoughts
It is important to make sure you can save as much as legally allowable on your taxes. Just make sure you don’t go overboard and wind up getting audited! Hopefully you found this compilation of tax deductions you never knew existed helpful! Are there other tax deductions that are not well known but can help to save a bundle?
