Due to the recent tax law changes, many more taxpayers will be taking the standard deduction vs itemizing for 2018. The standard deduction for 2018 is $24,000 for married filing jointly taxpayers (up from $12,700 in 2017). Significant changes to itemized deductions take effect this year. In order to itemize your deductions, the total of those must exceed the allowed $24,000.
- Medical Expenses – remain deductible to the extent they exceed 7.5% of AGI (must exceed 10% of AGI beginning in 2019).
- State & Local Taxes (includes state income tax, real estate tax and personal property tax) – limited to $10,000 for both single and married filing jointly taxpayers.
- Mortgage Interest – interest on loans up to $750,000 of new acquisition debt.
- Charitable Contributions – the 50% limitation has been increased to 60% for 2018.
- Miscellaneous – expenses that exceeded 2% of AGI that were deductible have been eliminated. Employee business expenses, investment advisor and tax prep fees are no longer included as itemized deductions.
- Phase Out – high income taxpayers were subject to phase out limits of itemized deductions previously but the phase out has been eliminated for 2018 – 2025.
For further information regarding tax law changes, please contact Jaclyn Ellis, CPA at firstname.lastname@example.org or 314-576-1350.