Advertisement
taxes

3 Lost Tax Deductions That Might Surprise You

As you’re doing your 2018 taxes, you'll see that deductions certainly aren't what they used to be.

The Tax Cuts and Jobs Act was the single largest tax reform legislation passed in the last 30 years. It changes tax laws that impact retirement planning, mortgages, corporation, partnerships, small-business owners and even state taxes to some degree.

3. Charitable Contributions

While charitable contributions were not removed by the TCJA, far fewer Americans will be able to take advantage of them in 2018. In order to deduct charitable contributions, you need to itemize. The number of tax filers who will itemize for 2018 is expected to drop dramatically.

Advertisement - Article continues below

But this isn’t all bad news. One reason itemizing at the federal level is dropping in 2018 is due to both reduced deductions and standard deduction almost doubling. In 2018, the standard deduction for a single filer is $12,000 and for married filing jointly is $24,000 — nearly double the standard deduction in 2017.

As such, far fewer individuals will have itemized expenses taking them above the standard deduction, meaning many people will not be able to deduct their charitable contributions. Keep in mind that there are some strategies to maximize your tax deductions for your charitable contributions, including bunching contributions and donor advised funds.

Whether you end up paying more or less in taxes in 2018 really depends on your situation. If you relied heavily on these popular itemized tax deductions in the past, your taxes could go up. Overall, most people will end up seeing a slight decrease in taxes thanks to the increased standard deduction — even though we said goodbye to some big deductions.

Advertisement
Advertisement - Article continues below

*Note that there’s an exception/grandfather clause for mortgages where there’s a binding contract before Dec. 15, 2017, to close before Jan. 1, 2018, and the purchase is complete by April 1, 2018.

About the Author

Jamie P. Hopkins, Esq., CFP, RICP

Director of Retirement Research, Carson Wealth

Jamie Hopkins is a well-recognized writer, speaker and thought leader in the area of retirement income planning. He serves as Director of Retirement Research at Carson Group and is a finance professor of practice at Creighton University's Heider College of Business. His most recent book, "Rewirement: Rewiring The Way You Think About Retirement," details the behavioral finance issues that hold people back from a more financially secure retirement.

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census
Politics

17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census

Every 10 years, the 435 seats in the House of Representatives are reassigned based on the results of the U.S.
July 2, 2020

Recommended

How to Get an Extension for Filing Your Tax Return
tax deadline

How to Get an Extension for Filing Your Tax Return

If you can't wrap up your tax return by the July 15 deadline, it's easy to buy yourself more time.
July 7, 2020
Tax Tips for Last-Minute Filing
tax deadline

Tax Tips for Last-Minute Filing

As you rush to meet the July 15 tax filing deadline, here are some pointers to bring your stress level down.
July 7, 2020
7 Reasons to File a Tax Return Even If You Don't Have To (Hint: They're Due July 15!)
tax filing

7 Reasons to File a Tax Return Even If You Don't Have To (Hint: They're Due July 15!)

Some people aren't required to file a tax return. But, if you fall into that category, you might want to file a return anyway.
July 6, 2020
20 IRS Audit Red Flags
tax returns

20 IRS Audit Red Flags

There's no sure way to avoid an IRS audit, but these red flags could increase your chances of drawing unwanted attention from the IRS.
July 1, 2020