As Americans get ready for the upcoming tax season, sweeping changes are going to affect how individuals and families file this year — including which deductions and credits they can claim.
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While the Tax Cuts and Jobs Act doubled the standard deduction for both individuals and married couples filing jointly – meaning fewer people are expected to itemize – it also changed allowable deductions.
Here’s a look at what is no longer – and what still is – able to be claimed, as compiled by TurboTax:
Under the previous law, families were able to claim a $4,050 exemption – per parent – for each child. That deduction is no longer viable.
However, the child tax credit was raised to $2,000, from $1,000. The law also introduced a $500 credit for non-child dependents, which could include elderly parents or children over the age of 17.
The earned income tax credit – for families with at least three children – is as much as $6,431.
Unreimbursed employee expenses
A number of employees’ business expenses that went unreimbursed by employers – like classes and seminars – are no longer deductible under the new law.
Instead there are a number of education credits eligible taxpayers can take advantage of.
The American Opportunity Credit allows eligible students or parents to claim up to $2,500 for the costs of college or post-secondary education.
The Lifetime Learning Credit, for as much as $2,000, can be claimed by individuals who are paying tuition and fees to a college or post-secondary school, including for classes.
Further, up to $2,500 of interest paid on a student loan is deductible.
In 2017, workers moving for a new job could deduct related expenses on their tax returns. Everyone, except members of the armed forces, has lost that benefit.
One way Americans may potentially be able to offset some expenses is by deducting mortgage interest and property taxes when a new home is purchased.
Under previous law, the higher-earning spouse could deduct alimony payments on his or her tax filings. The recipient included the payments as part of his or her taxable gross income.
However, for divorces finalized in 2019 and after, alimony payments will no longer be a deductible expense for the payer. This could serve to reduce the amount of money given to the payee, causing tax attorneys to have to divvy up a smaller pool of payment support.