Common And Uncommon Tax Write-Offs To Look Out For This Tax Season

When it comes to paying taxes, there are a lot of people who are not aware of tax write-offs items. This is because a lot of people would rather get the filing done and don’t want to spend too much time on filing. However, overpaying your taxes is a lot worse than spending your whole day sorting receipts and other documents. Keep reading about some of the changes whether you are filing as a married couple together or married filing separately.

A tax write-off is an expense that can be deducted from the taxable income, reducing the amount of the tax payable. A lot of people don’t care too much about tax filing. Those people who do are usually from corporations, small businesses, and individuals who are self-employed. Another reason why some people are opting for the standard deduction instead of itemizing their deduction because the US tax law is confusing and can cost a lot of time. According to GAO, taxpayers are overpaying by $1 billion by claiming the standard deduction. If you’re planning to take a look at your itemized deductions, you should first know the changes brought by the Trump Tax Reform.

The Trump Tax Reform: Write-Offs That Cannot Be Claimed Anymore

The Tax Cuts and Jobs Act, or the Trump Tax Reform, which was passed in December 2017, made a lot of changes in the tax system of the country. One such change is limiting or slashing down tax write-offs. Here is the list of Tax write-offs that cannot be claimed anymore.

1.Personal Exemptions

The personal exemption of $4,050 was slashed in 2017. Personal exemptions can become a leveraging tool for larger families when it comes to their taxes. Slashing off this deduction will have a great impact on families with more members.

2. Casualty and theft losses

These are the losses from fires, earthquakes, floods, and other natural disasters. This item can now only be claimed when the disaster is a federally declared disaster.

3. Unlimited SALT deduction

SALT or state and local taxes are now limited to $10,000 in all state taxes. Because of this, those who are in the higher income and lives in the state will hit the most, according to Life.

4.Mortgage Interest worth $750,000 and above

The cap of $1 million was reduced to $750,000 for residential loans. This will only affect the new homeowners.

5.Moving expenses

Expenses used in moving for a job is now not applicable. Only those members of the military service who are moving for assignment can claim this tax deduction.

Common Itemized Deduction

1. Charitable Deduction

According to the Tax Foundation, 82% of all households that choose itemized deductions are including charitable deductions. On average, those who are making less than $100,000 a year claimed a deduction of $2,820. While those households who claimed more than $100,000 a year claimed more than $8,495 worth of deduction.

2. Mortgage Interest Deduction

In 2013, 34 million taxpayers claimed mortgage interest deduction. It is one of the most popular deductions claimed by most taxpayers. However, because of the cap from the Trump Tax Reform, people who have $750,000 worth of interest cannot claim it anymore.

3. SALT or State and Local Taxes

SALT of state and local taxes is the most popular item in the itemized deduction. This is because whether a taxpayer is also a business owner or not, a taxpayer likely pays income, sales, or property tax. The SALT deduction is now capped at $10,000.

Uncommon Itemized Deductions

1. State Sales Taxes

State Sales Tax write-off is one of the most overlooked tax deductions. Most people are using the state and local income tax than state and local sales tax. This is a deduction that comes from taxes placed on the sale or the lease of goods and services in the United States. Rates will vary, depending on the state, which makes the treatment for this item different. Whether you opt for the state and local sales tax or state and local income tax, you can only choose one, and the cap of $10,000 still applies. Choose what is the best option for you.

2. Out-of-the-pocket charitable contributions

These out-of-the-pocket charitable contributions are hard to monitor because it is not in the payroll deduction. If you’re the kind of person who likes helping non-profit organizations, the donation can be claimed as a deduction. This can only be applied if you donated in the qualified charity or non-profit organization. Deductible items include the cost of gas an oil related to the service, as well as other extra expenses. 

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