But that doesn’t mean you lose out on all deductions. There are still several things you can do to lower your tax bill. If you have wages or other earned income, you can probably still make a contribution to a traditional individual retirement account (IRA) and reduce your 2018 tax bill. The contribution limit is $5,500 ($6,500 if you’re 50 or older) and you can make a contribution by April 15, 2019 and deduct it on your 2018 return. Limitations apply if you or your spouse has a retirement plan at work.
In many cases, education costs for college are deductible. One deductible cost is student loan interest. You can deduct interest for you, your spouse or a dependent up to $2,500 if your modified adjusted gross income is less than $65,000 if you’re single or less than $130,000 if you’re married filing a joint return. Above those levels the deduction phases out and is completely gone once income goes above $80,000 if you’re single or $165,000 if you’re married.
Most employee deductions were eliminated but there are a few still available. Schoolteachers can deduct up to $250 of classroom supplies they buy personally using the Educator Expense Deduction. You have to teach kindergarten through 12th grade and you have to work at least 900 hours. Aides, counselors and principals qualify but home school teachers aren’t eligible for this deduction.
The deduction for employees who incur travel or meal expenses on the job was eliminated for everyone except Army Reserve members traveling to drills. You must travel at least 100 miles from home and stay away from home overnight. If you meet these qualifications, you can deduct the cost of lodging and meals using the federal per diem schedule, as well as mileage at 54.5 cents per mile plus parking, fees and tolls.
An often-overlooked deduction is available for disabled taxpayers. If you’re disabled and incur job expenses that allow you to work, such as a deaf employee that requires a sign-language interpreter during meetings, those expenses are deductible.
Another one most people miss is early withdrawal penalties charged by a bank for early withdrawal from a CD. You still report as income the full amount of interest paid by the bank, but any penalty will reduce your income, whether you itemize or not.
With the increase in the Standard Deduction, most taxpayers will only focus in gathering income items to correctly calculate their tax liability. But don’t overlook any of these, or other, deductions that may still lower your tax bill. If you have questions about deductions that might save you money, please call or email our office.
At Faw & Associates, we are always available to answer any of your tax or financial planning questions. We are accepting new clients please contact us for an appointment.At Faw & Associates, we are always available to answer any of your tax or financial planning questions. We are accepting new clients please contact us for an appointment.