There are not many changes when it comes to tax deductions 2020. With the new stimulus package that the government releases, there is some confusion in what they can expect from it.
Some tax breaks can return after some portion of laws expire in the year 2025. But until that time, some tax deductions are now extinct.
Here is a list of some of the tax deductions that are not in existence and might not return any time soon.
Standard $6350 Deduction
It is good news for many as the new tax law has doubled the deductible amount. Taxpayers can take advantage of the standard deductions rather than itemizing deductible expenses. In 2017, single taxpayers were eligible for only $6350.
But from 2018, that amount has doubled. Individuals qualify for a tax deduction of $ 12,400. Married couples are eligible for $12,400 when they submit the tax forms together. Filers that are head of a household can qualify for a total deduction of $18,650.
Many households in the country were happy when they announced the new standard deductions. But, there was a tradeoff. The government eradicated many of the previous deductions that individuals and families claimed by introducing the new standard deduction.
One of the deductions that went away is the personal exemption. This change mainly affected dependants and taxpayers. In the past, taxpayers were able to deduct $4050 for each dependant.
Eliminating this tax deduction affected families adversely. Of course, the standard deduction is fair, but it might not fully compensate for the loss of personal exemptions.
Deductions toward Unreimbursed Employee Expenses
Previously workers could get reimbursements related to their job purchases if it was more than 2% of their total gross income in the year 2017. Employees had an advantage as a result of it. They were having some of the significant write-offs.
Now that this deduction is no more in existence, taxpayers will not see this option anymore in tax deductions 2020. Employees may need to work with their employers to get the reimbursement instead of relying on this tax deduction.
Deduction Towards Moving Expenses
In the past, taxpayers could apply for a deduction if they moved to a different city for work. But, unfortunately, you might not qualify for this particular deduction if you made a move for the job last year. The only eligible people for this deduction are military officers who moved to a different location on an assignment.
One Million Mortgage Interest Deduction
If you live in New York or California, the amount you can deduct towards mortgage interest has changed significantly. Married couples could easily deduct upto 1 million on mortgage interest in 2017. This norm has changed, starting in 2018.
Unrestricted Casualty Loss Deduction
From 2018, only those residing in presidentially designated disaster zones can use this tax deduction. Previously, it was okay for taxpayers to claim this deduction from federal taxes if their house burned out and insurance was unwilling to cover all of the losses.