If you were collecting your receipts with the hope of claiming a big tax break on your 2019 taxes to be paid next year, you may want to be prepared for the disappointment. That’s because the new Tax cuts and Jobs Act have set some limits on itemized deductions. The new tax law also has eliminated personal and dependent exemptions in 2018 but with a balanced approach by doubling the standard deduction amount. Which will increase the number of American taxpayers who take the standard deduction. Now that some options are out of the way to itemize, standard deduction seems to be a better and quicker option for many. Here are some of the highlights for eliminated deductions.
The new Tax Cuts and Jobs Act suspends the deduction for work-related expenses or other miscellaneous itemized deductions that exceed 2% of AGI. This includes unreimbursed employee expenses such as union dues, uniforms, and business-related meals, entertainment, and travel.
Home Equity Loan Interest
Taxpayers are no longer able to deduct interest paid on most home equity loans but if they used the loan proceeds to build, buy, or substantially improve their main home or second home.
State and Local Taxes
If you are living in a major state like California or New York, you are probably feeling the squeeze from real estate and property taxes. The new law limits the deduction of state and local income, sales, and property taxes to a combined, total deductible amount of $10,000 for joint filers. The amount is half of that for married couples filing separately and for the single filers. You can not deduct any state and local taxes you paid above this amount.
Theft and Casualty Losses
You were able to claim an itemized deduction for property losses that aren’t reimbursed by insurance and that occur unexpectedly under the old tax law. It would include accidents, theft, natural disasters, and fire. However, now you can only claim personal casualty losses if the damage is attributable to a federally declared disaster area. One thing to keep in mind with this is that most of the disaster areas are declared county by county. If such even occurred to you, make sure that your county also has been declared as one.