Haven’t Filed Taxes Recently? Here Are Some Deductions That No Longer Exist
Many people are filing taxes for the first time in a while to claim the balance of their extended Child Tax Credit or stimulus payments they’re still owed. If you haven’t filed since before the Trump Administration, you might be surprised to find that many tax deductions have vanished or been scaled back since the Tax Cuts and Jobs Act of 2017 passed.
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Here are a few deductions and exemptions you can no longer claim in the 2023 tax season — or that have caps that didn’t exist prior to the 2017 law.
Discontinued Deductions and Exemptions
The following items that used to be deductible no longer are.
Personal Exemption for Taxpayers and Dependents
Prior to 2017, taxpayers could subtract $4,050 from their taxable income for themselves and each dependent they claimed. That exemption has disappeared.
Itemized Deductions
Many itemized deductions have disappeared for W-2 employees. Employees can no longer deduct fees related to financial services, including tax preparation, professional membership dues, unreimbursed employment expenses for most employees, moving expenses (except for members of the military), and alimony payments for couples who separated after Dec. 31, 2018.
Mortgage Insurance Premium
When a borrower purchases a home with less than 20% down, the lender requires that they have mortgage insurance, which protects the lender in the event the borrower defaults on their loan. The TCJA eliminated the deduction. Although Congress extended the deduction in 2018 for premiums paid before the end of 2017[x], according to The CPA Journal, that extension has expired[x].
Capped Deductions
Some previously unlimited deductions now have caps.
State and Local Tax Deductions (SALT)
State and local taxes (SALT) used to be fully deductible for taxpayers who itemized expenses. Today’s tax laws cap the deduction at $10,000 annually. The cap includes property tax plus either state income tax or sales tax[x].
Mortgage Interest
Previously, homeowners could deduct mortgage interest payments for mortgages up to $1 million. That cap was reduced to the first $750,000 of your loan amount[x].
Home Equity Loan Interest
Likewise, home-equity-loan interest paid in or after 2018 is not deductible. Following the inception of the TCJA, interest paid before 2018 was included in the $750,000 cap for mortgage interest. Plus, you could only deduct interest on the loan if you were using the money to buy, build or substantially improve the home that secures the loan.
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In spite of the loss of many deductions, the standard deduction of $6,350 for individuals has nearly doubled, to $12,950, and risen to $25,900 for married couples filing jointly and $19,400 for those who file as head of household. With the increased standard deduction, combined with the loss of many other deductions, more taxpayers may opt not to itemize. This can vastly simplify tax filing while ensuring you can receive the money you are owed from the IRS.
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This article originally appeared on GOBankingRates.com: Haven’t Filed Taxes Recently? Here Are Some Deductions That No Longer Exist
