Every year the government of the United States makes changes to the tax laws. At the end of 2016, Congress of the United States cut off some of the credits and deductions. Here is what can affect your 2017 tax return:
1. Mortgage Insurance Premium Deduction
Mortgage Insurance Premium or MIP is paid if your down payment is less than 20% on your home loan. The MIP must be paid by the buyer to protect the lender from losses in case if the buyer is not able to make mortgage payments later. In 2016 MIP cost in average between 0.5% to 1% of the entire loan amount on an annual basis. This amount was 100% tax deductible if your adjusted gross income did not exceed $100,000 per household. In 2017, homeowners will miss several hundred of dollars because of termination of this deduction.
2. Medical Expense Exception for Seniors
In 2016, seniors and their spouse's age 65 and older could deduct qualified medical expenses if they were higher than 7.5 % of adjusted gross income. Starting 2017 adjusted gross income limit increased to 10%.
3. Tuition and Fees Deduction
Nowadays, education becomes extremely expensive. Before 2017 many families could reduce their income by deducting tuitions and fees for themselves, dependents, or spouses. They could do it even if they did not itemize their deductions. However, in 2017 this deduction cannot be used to reduce your gross income.
4. Energy-Saving Home Improvement Credits
In the past decade, many homeowners in the USA got energy-saving improvements such as energy-efficient water heater. This improvement reduced not only utility bills but also reduce tax bill at the same time. In 2017, you can no longer claim 10% tax credit for the price of improvement.