For most Americans the 2017 tax year is now in the books and now it’s time to start thinking about tax strategies for the 2018 tax year. For the 2018 tax year the new tax cuts and laws will be a significant factor influencing the way in which millions of tax payers will plan their tax strategies. For many Americans the changes in the standard deductions will eliminate the need to itemize while others will be looking for more deductions. To help those who will need more deductions, here are some deductions that often get overlooked.
In the past, when parents paid off a student loan for their children, there was no tax break that could be claimed by anyone. If you wanted to claim a deduction, you had to be the one who both incurred and paid off the loan. Today, the IRS treats a loan paid by the parents of the student as though they gave the money to the student, who then used the money to pay off the loan. If the student is not a dependent, they can qualify to deduct up to $2,500 of the student loan interest.
Remember that if you paid taxes the last time you filed a return, you can include that amount with your state tax itemized deduction on the next tax return along with state income taxes withheld from your paychecks or paid through quarterly estimated payments.
Jury duty presents an interesting situation with some employers. Some employers will continue to pay an employee a full salary while they are on jury duty but require the employee to turn over their jury fees to the company. These fees are seen as income by the IRS and you will be taxed on them if you don’t remember to deduct the amount, which you have the right to do.
The 2018 tax changes will create new opportunities and challenges for many tax payers. If you aren’t sure where you stand, see a professional.