No more dependent exemption, which provides $4,050 for each qualifying dependent ... Yourself, spouse, and each child.
Repeals tax credit for adoption.
Student loan interest deduction is repealed.
Deductions for medical savings accounts, repealed. This was one of the major draws of HSAs, no?
Moving expenses deduction, repealed.
Alimony deduction, repealed.
Medical expenses deduction, repealed - treatment, transportation, long-term care, etc.
Quote:
The House Tax Bill: Six Popular Breaks You Didn't Realize You'll Be Losing
Earlier today, the House of Representatives released its vision of tax reform, and there's a lot to digest. Over 420 pages, in fact. Luckily, there has been no shortage of quality coverage of the bill around the interwebs, detailing the changes to tax rates and personal exemptions and the like.
But with 420 pages, some things are sure to slip through the cracks, and it is to these less publicized items that this column intends to draw attention.
Of course, there are both unexpected tax breaks and increases hidden within the bowls of the bill, but lest you forget, I'm generally a miserable person who prefers to dwell on the negative. As a result, let's take a look at six tax breaks that you very likely didn't realize you will lose if today's bill becomes law.
#1: Divorce just got even more expensive
Under current law, alimony payments are deductible by the payor, and considered taxable income to the payee. And because you people are simply incapable of remaining faithful, there is a lot of alimony paid each year, about $10 billion to be exact.
The House bill eliminated the deduction for alimony. The change doesn't add much revenue, however, because the bill also makes alimony tax-free to the recipient. As a result, it raises only $8 billion over ten years, almost entirely from Larry King.
#2: Don't be in a rush to sell your house
When you sell your home, provided you have owned and used the home as your primary residence for two of the prior five years, you may exclude up to $500,000 of the gain (if married, $250,000 if single).
The House bill would require that, in order to exclude the gain from a sale, you own and use the house as your primary residence for five of the prior eight years. In addition, you begin to lose the exemption as adjusted gross income (in a look back period) exceeds $500,000 (if married, $250,000 if single).
#3: Don't get sick. Or move. Or go back to school. Or do anything, really.
Taxpayers may deduct medical expenses incurred to mitigate, diagnose, treat a disease. Today's bill would eliminate the deduction for all medical expenses. This will prove particularly damaging to the elderly, many of whom have traditionally relied on the deduction for a portion of their nursing home care to wipe out any income they use to pay those expenses.
In addition, if you have to move for a new job, you generally may deduct the cost to transport your belongings to your new home. Generally, your new gig must be at least 50 miles farther from your old house than your old gig. In other words, your commute, had you not moved, would have grown by 50 miles.
Today's bill will eliminate the moving deduction. But don't let a lost tax deduction motivate you to hire a low-budget moving company. My wife and I tried that once and ended up engaging the services of what I can only assume was the Russian mob. Needless to say, things did not go well, at least until I paid three grand to get my stuff out of a storage locker in Kansas.
Finally, if you're an employee who was thinking of going back to school for a graduate degree in your particular business field, you may want to think twice. Under current law, your employer can pay up to $5,250 of your tuition, books, etc... and you don't have to recognize the payment as income. Alternatively, if your employer won't pay for you to go to school, you may deduct any unreimbursed educational expenses, provided the education simply maintains or improves your existing skills, and doesn't prepare or qualify you for a new trade or business.
Today's bill would eliminate BOTH the ability to receive tax-free educational assistance from your employer and the unreimbursed employee expense for professional education. So if the employer pays, you're recognizing taxable income, and if you pay, you get no deduction. I guess it makes sense for the GOP to discourage education; after all, if the country wises up, what happens to Fox News? HI-YO!
#4: Every day will be "bring your kid to work day!"
Similar to educational assistance, an employer may pay directly or reimburse up to $5,000 for an employee's dependent care expenses, without the employee having to recognize the income. This allows the employee to seek care for a child under 13 on a tax-free basis.
Well, get ready to spend considerably more quality time with Junior, because today's bill would eliminate the exclusion. As a result, any amount the employer pays on your behalf or reimburses you is taxable income.
#5: You didn't think it was possible, but somehow your student loans just became a BIGGER hassle
Taxpayers can deduct -- up to certain limits -- the interest paid on student loans. Even better, the deduction is not an itemized deduction, so every taxpayer is eligible, though the deductions do disappear as income exceeds fairly moderate thresholds.
The House bill would eliminate the deduction for student loan interest, leaving you without even a tax benefit to show for that ill-advised philosophy degree.
#6: Time to fire your tax preparer (note: do not fire your tax preparer)
Nobody likes their tax preparer. Trust me, I know, I'm one of them AND I"m surrounded by them all day. We're the worst. But at least in the past, you could stomach your interactions with people like me because you knew that every penny you paid me was tax deductible.
Well, no more...the House bill eliminates the deduction for tax prep fees. But don't let that discourage you from offering up a healthy tip. I've got kids to feed.
https://www.forbes.com/sites/anthonynit ... 6e645b5453_________________
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