Fires, Floods and Thieves
House burned down? Storm destroyed it? Or did a burglar steal many valuable items? You can deduct your losses, at least for now. If the bill passes, you will generally not be able to do this anymore starting in 2018, though future one-off legislation for big natural disasters might provide one-time relief.
Selling Your Home
The bill would make it harder for people who bought and flipped homes for a profit to qualify for tax breaks, starting next year.
Currently, a married couple filing their taxes jointly can exclude up to $500,000 in capital gains on the sale of a home, as long as they’ve used it as a primary residence for two of the past five years. Under the proposed bill, however, taxpayers would need to have lived in the home for five out of the previous eight years — and the tax break could be used only once every five years, down from once every two years.
The tax break would begin to phase out for taxpayers whose adjusted gross income exceeded $250,000 (or $500,000 for joint filers).
At the moment, when employers pay your tuition for continuing education, the amount they pay is not taxable income for you as long as it meets certain conditions and amounts to no more than $5,250 per year. If the tax bill passes as written, these tuition payments will count as taxable income starting in 2018.
Relocating for a new job? Moving costs would no longer be a deductible expense in 2018. As it stands, taxpayers can deduct moving expenses — even if they do not itemize their tax returns — as long as the new workplace is at least 50 miles farther from the old home than the old job location was from the old home. (If you had no workplace, the new job must be at least 50 miles from your old home.)
For the moment, you can deduct out-of-pocket medical expenses that exceed 10 percent of your adjusted gross income (but not the expenses that amount to the first 10 percent). This is particularly useful for elderly people and others with lower incomes who need regular assistance and care. The tax bill would do away with the deduction in 2018.
Families seeking to adopt a child would lose on two fronts if the bill became law. First, if an employer provides financial assistance to a worker adopting a child, that money would be taxed as income starting next year. In 2017, when an employer pays for up to $13,570 in qualified adoption expenses for an employee, the employee pays no taxes on that assistance.
The bill would also repeal the baseline adoption credit, which generally provides taxpayers with a credit of up to $13,570 per eligible child in 2017. Under the current rules, the credit would be phased out for taxpayers with adjusted gross income between $203,540 and $243,540.
Divorce would become a bit more burdensome for the ex-spouse who paid alimony because it would no longer be a deductible expense. But the party receiving the payments would no longer need to pay tax on the income received. The change would take effect for divorce and separation agreements (and any changes to current agreements) executed after 2017.
Taxpayers who itemize their returns would no longer be able to deduct the amount that their tax preparation specialist billed them or any similar expenses. Since the tax bill aims to reduce the number of taxpayers who itemize, in theory fewer people should require professional tax help (with the exception of wealthier people, who can afford to lose this break).
Buyers of qualifying plug-in electric vehicles, like the Chevrolet Bolt or Volt and Tesla’s cars, can sometimes get a tax credit for up to $7,500. The bill would do away with this credit.