If you're anticipating deducting your 2018 property taxes to get a jump on the new tax reform, there are some stipulations you'll want to be aware of before you file.
The IRS on Dec. 27 said that paying anticipated state and local property taxes before they have been assessed is only allowed if assessed and prepaid during 2017.
President Donald Trump's tax reform, signed into law just before Christmas, places caps on the dollar amount homeowners can deduct in property taxes. The new deduction allows up to $10,000 to be claimed.
However, the tax code also includes the stipulation that only those who prepaid state and local taxes in the previous year are eligible. In addition, the taxes must have been assessed and billed. Prepayment of anticipated taxes is not allowed.
Known as the Tax Cuts and Jobs Act, the tax reform legislation is one political promise that has come to fruition during Donald Trump's first year in office, and he has touted how effective it will be in both streamlining the tax code and helping more Americans to get ahead.
Under the new legislation, the standard deduction for singles rises to $6,350, while married couples who file jointly will benefit from a $12,700 deduction, according to CNBC.
Gone from the new tax code, however, are the plethora of itemized deductions for expenses such as mortgage interest and other modifiers that serve to reduce income.
According to the Urban-Brookings Tax Policy Center, more than a quarter of taxpayers -- nearly 50 million -- itemize on their tax returns. That number is sure to be much lower in 2018.
As CNBC reports, another itemized deductions you can say goodbye to is casualty losses. Starting in 2018, it's not allowed, unless your loss occurs in an area where a disaster has been declared by the president. This peculiar provision expires after 2025.
Jeffrey Levine, a CPA and director of financial planning at BluePrint Wealth Alliance in Garden City, New York, offered his frank professional perspective on the impact of the new rules.
"If you live in Houston, you're protected from the effects of [Hurricane Harvey], but if your house is destroyed in a flood, you're out of luck."
Finally, if you're thinking about moving across the country in the coming year, say goodbye to the deduction for moving expenses, because that's been shelved, too. Not permanently, but "suspended" until 2025, similar to casualty losses.
Sources: CNBC, (2) / Featured Image: Pixabay / Embedded Images: Office of the President of the United States via Wikimedia Commons, 401(K) 2012/Flickr