Taxpayers are understandably worried about the sweeping reforms from the Republican tax bill. But while there will be changes in your tax return, there will also be many things that remain as is.
So when you’re preparing your tax return, such as when you purchased the DIY software from H&R Block, or you let its tax preparers do the job for you, keep these things in mind. Your tax return will be more accurate for it.
Dependent Care Accounts
The House once proposed the elimination of workplace dependent care savings account allowing employees to save $5,000 per year, tax-free. But it subsequently changed the provision so that the accounts will not be valid in 2023.
The Senate, on the other hand, never made changes. In fact, the final bill reflected such a no-change approach.
Adoption Assistance Programs
The House also proposed that the deduction for adoption assistance be repealed but the final bill at the Senate reflected no such repeal. By the way, adoption assistance refers to the monetary assistance provided by an employer to an employee who adopts a child.
Student Loan Interest
The final bill also reflects a no-repeal approach to tax deductions for student loan interest.
Waivers on Tuition
While the House proposed taxing benefit related to tuition waivers, the final bills doesn’t have said provision. Tuition waivers refer to the benefit enjoyed by employees of colleges and universities who received decreased tuition assessments for themselves, for their dependents or their spouses, said benefit of which isn’t taxed as income. Many graduate students benefit from the non-taxable nature of tuition waivers.
Tuition Paid by Employers
Yet another tuition-related expense that the House proposed for taxing is employer-paid tuition, but the final version of the bill doesn’t have it. In an employer-paid tuition scheme, your employer pays for your continuing education tuition with the amount not being considered as taxable income under certain conditions. The amount should also not exceed $5,250 in a year.
Other tax-related income and costs still considered as such under the old tax rules and regulations include:
- Capital gains from home sales ($500,000 for married couples and $250,000 for single individuals under certain conditions);
- 401(k) tax break
- Electric cars purchase tax break (up to $7,500 on the Volt and Tesla cars, or on a Chevrolet Bolt)
- Archer medical savings accounts still have tax breaks for contributions
- Sales of stocks and mutual funds
The no-change approach adopted by the House and Senate on these provisions may or may not work in your favor. But regardless of their impact on your life, you should still follow the law – jail time and penalties aren’t good things to have in your life, after all.