Some of your deductions may be smaller (or nonexistent) when you file your 2018 tax return

Some of your deductions may be smaller (or nonexistent) when you file your 2018 tax returnWhile the Tax Cuts and Jobs Act (TCJA) reduces most income tax rates and expands some tax breaks, it limits or eliminates several itemized deductions that have been valuable to many individual taxpayers. Here are five deductions you may see shrink or disappear when you file your 2018 income tax return:

Now’s the time to start thinking about “bunching” — miscellaneous itemized deductions, that is

08_23_16-101359492_ITB_560x292.jpgMany expenses that may qualify as miscellaneous itemized deductions are deductible only to the extent they exceed, in aggregate, 2% of your adjusted gross income (AGI). Bunching these expenses into a single year may allow you to exceed this “floor.” So now is a good time to add up your potential deductions to date to see if bunching is a smart strategy for you this year.

To deduct business losses, you may have to prove “material participation”

Material_Participation.jpgYou can only deduct losses from an S corporation, partnership or LLC if you “materially participate” in the business. If you don’t, your losses are generally “passive” and can only be used to offset income from other passive activities. Any excess passive loss is suspended and must be carried forward to future years.