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Itemized Deductions - Changes under the New Tax Law

Posted by Admin Posted on June 11 2018

 

Itemized Deductions – Changes under the New Tax Law – for the most part individual taxpayers who’ve itemized their deductions in the past will continue to want to track their annual expenses for medical, property, and other relevant taxes, mortgage interest and charitable donations.  The biggest single change taking place effective in 2018 is the increase in the standard deduction, which for single filers increases from $6,350 in 2017 to $12,000 in 2018, and for married filing jointly taxpayers increases from $12,700 in 2017 to $24,000 in 2018. This of course means that the threshold to itemize has increased to the point where individual taxpayers who were on the bubble won’t be able itemize their deductions this year, if the total of eligible itemized deductions falls below these levels.  Additionally, individual taxpayers will no longer be able to itemize “miscellaneous” expenses that fall within the 2% AGI limited category, such as for unreimbursed employment costs, union dues and professional fees paid for tax preparation and investment management, etc.  An extremely important tax planning point is that while the standard deduction has been increased, the deduction for personal exemptions has been eliminated, so that a family of 4 for example will lose approximately $16,000 in personal exemption deductions, which more than offsets the potential increase in the standard deduction.  Please contact us if you have any questions or want to discuss the specifics of your particular income tax planning needs.  Mike and staff

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