Three tax breaks expired permanently in 2016, so don’t count on these when you file your 2017 taxes:
1. Home mortgage insurance premium deduction
If you bought your home with less than a 20 percent down payment, banks typically require you to pay for home mortgage insurance. The ability to deduct the cost of that insurance from an itemized return expired in 2016.
- Tip: Not much can be done here, other than paying down your mortgage to eliminate the need for this insurance.
2. Tuition and fees deduction
A tax break to deduct up to $4,000 of tuition and fees from accredited educational institutions is now expired.
- Tip: Leverage other educational tax breaks such as the American Opportunity Tax Credit and the Lifetime Learning Credit.
3. Reduced senior medical expense threshold
Seniors age 65 and older were able to deduct the cost of medical expenses greater than 7.5 percent of their adjusted gross income, which was a lower threshold than normal. They lose that benefit in 2017, when the threshold will be 10 percent for everyone.
- Tip: Plan for two years of medical procedures if possible. This way you can load up your medical expenses into one year to take advantage of the new, higher threshold. This is especially important if a family member has unexpected medical bills. Getting all the billing into one tax year becomes more important than ever.
Keep in mind we may see these tax breaks return if Congress acts to reinstate them.
Call your tax professional at (888) 388-1040 to discuss your upcoming 2017 tax return.
Year-End 2017: This newsletter is issued annually to provide you with information about minimizing your taxes. Do not apply this general information to your specific situation without additional details. Be aware that the tax laws contain varying effective dates and numerous limitations and exceptions that cannot be summarized easily. For details and guidance in applying the tax rules to your individual circumstances, please contact us. ©MC
