With new federal tax reforms slated to take effect for the 2018 tax year, now is the time to start planning on how these changes will impact you. Part of your planning should also include different ways in which you can lower your tax bill. Let’s take a look at some of the changes and how they could impact what you owe the IRS.
- Home Loans: You will still be able to deduct up to $750,000 in mortgage interest from your federal refund in 2018. So, if you have been thinking about buying a home, now is a good time to do so with a mortgage from our federal credit union.
- Property Taxes: Another reason to buy a home in 2018 is you will still be able to deduct property taxes. However, there is a cap of $10,000, which also will include other deductible taxes, like certain sales taxes.
- Non-Reimbursed Business Expenses: If you work for someone else and have unpaid expenses you have been deducting, you will not be able to this next year. Although, if you start your own part-time business, you can tap into many self-employment deductions still available, including the Section 179 equipment deduction, mileage deduction, and home office deduction.
- Make regular contributions to an IRA or 401(k) retirement account. Money you have deducted from your paycheck and placed into a retirement account is pre-tax income. Plus, the money saved for retirement is not included as taxable income.
- Buy a plug-in electric or hybrid electric vehicle. 2018 is expected to be the last year the full $7,500 federal deduction will be available. As automakers hit 200,000 vehicles sold, the tax credits will drop to $3,750 for the next six months, then $1,875 the following six months, and then be gone.
- Enroll at least part-time for college courses. There are a few educational tax credits that will still be available in 2018 that can reduce the costs of improving your skills or finishing your degree.
- Utilize Affordable Care Act health insurance credits. If you qualify for health insurance credits through the federal government marketplace, these can help lower your tax bill come next year.
- Start a family. Child tax credits are still part of the next tax reform bill. In fact, they have been raised from $1,000 per child to $2,000 per child. If you adopt, you could also qualify for a tax credit and other benefits, up to $13,750 worth of adoption assistance.
- Keep receipts of unreimbursed medical expenses. In 2018, you can deduct medical expenses that exceed 7.5% of your adjusted gross income.
- Take out a home equity line of credit or loan and make home improvements. The interest on both of these is tax deductible for 2018, so long as the money was used for home improvements.
To apply for a home equity loan or mortgage, or to open an IRA or business checking account, please feel free to stop by your nearest branch of The People’s Federal Credit Union or call us at 806-359-8571 today!