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Tax-Law Changes You May Have Missed

Tom Herman

Old habits die hard, especially when it comes to taxes. For many taxpayers, it may be tempting to assume that long-cherished tax-planning strategies that have worked in recent years should work again this year.

That can be a dangerous misconception.

Readers may be surprised by a few tax-law changes enacted late last year that have received relatively little attention. Tax advisers say the new law is packed with so many important and often complex changes that many people would be well-advised to take a fresh look at their withholdings, estimated taxes or both before 2019 arrives in less than four months.

The tax package contains “the most significant changes to the tax law since the Tax Reform Act of 1986,” says Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.

Here are a few changes that readers might have missed, including important exceptions to the general rules, as well as some often-overlooked breaks that haven’t changed.

Moving expenses: Did you make a major move this year or are thinking about it? It could turn out to be more expensive than you think. The reason: Part of the new law eliminates moving-expense deductions for most taxpayers, effective this year and running through 2025.

Elimination of this deduction could have “an important impact” on relocation decisions of both individuals and employers, Mr. Luscombe says.

The new law also ended the exclusion for moving expenses that are reimbursed by employers. But there is an important exception: The moving-expense deduction and exclusion remain valid for members of the “Armed Forces on active duty,” according to the Internal Revenue Service website.

The law also repealed through 2025 the deduction for unreimbursed employee business expenses, according to Mr. Luscombe. In addition, ”employers will now be responsible for withholding and FICA taxes related to reimbursed moving expenses now being taxed as wages.”

Taxpayers also can’t deduct the costs of using their cars, trucks and other vehicles for moving-expense purposes. For 2017, the standard mileage rate for using your vehicle to move to a new home was 17 cents per mile, the IRS said on its website.

These changes don’t affect moving expenses during 2017. If you moved last year and qualified to deduct certain expenses, the costs could be deducted on your return for 2017, due to be filed in 2018. See IRS Publication 521 for details on the old law.

Stormy Weather: The new tax law eliminates deductions for casualty and theft losses, effective this year and running through 2025. But lawmakers didn’t erase a longstanding provision that allows victims with losses in federally declared disaster areas to deduct their losses, subject to certain limits.

Also left intact is a special provision that allows those victims an unusual choice on when to deduct their losses: They can claim them for the year in which the losses actually occurred or for the prior year. Those who already have filed their return for 2017 can file an amended return for that year using Form 1040X.

See the Federal Emergency Management Agency’s website for a list of affected areas.

Charitable giving: Among the biggest changes in the new law are large increases in the standard-deduction amounts and a $10,000 limit on deductions for state and local taxes in most cases. As a result, many people who long have benefited by itemizing their deductions will find it more advantageous to choose the standard deduction for this year. Taxpayers who take the standard deduction can’t deduct charitable donations.

However, the new law didn’t change the rules for qualified charitable distributions, or QCDs. This provision allows many taxpayers age 70½ or older to transfer as much as $100,000 a year to qualified charities from their individual retirement account—as long as the money is transferred directly to the charities.

This transfer counts toward the taxpayer’s required minimum distribution for the year. Although it isn’t tax-deductible, the transfer can be highly beneficial because the amount isn’t included in the taxpayer’s adjusted gross income. And your adjusted-gross-income level can affect other major items, such as the net investment income tax and how much of your Social Security benefits may be taxable. Be sure to keep good records.

Miscellany: The tax law eliminates most miscellaneous itemized deductions. That includes deductions for employee business expenses, tax-preparation fees, investment expenses (including investment management fees), job-search expenses, and hobby losses, according to the IRS.


Reminder: Oct. 15 is the filing deadline for millions of taxpayers who received six-month extensions earlier this year on their individual income-tax returns. Generally, the IRS won’t grant additional extensions, although—as with so many tax laws—there are exceptions. In April, the IRS said it expects to receive more than 14 million extension requests from taxpayers this year, a spokesman says.

Mr. Herman is a writer in New York City. He was formerly The Wall Street Journal’s Tax Report columnist. Send comments and tax questions to taxquestions@wsj.com@wsj.com.

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