Teipen | 2018 tax reform brought big changes to itemized deductions. Here’s what to know.
The Tax Cuts and Jobs Act, enacted in 2018, affect almost everyone who itemized deductions on tax returns.
One of the most significant changes is that TCJA nearly doubled the standard deduction for most taxpayers. This means that many individuals found it more beneficial to take the standard deduction rather than listing all itemized deductions, as they may have done in previous years.
How do you know which is right for you? You might consider itemizing if your total deductions exceed the standard deduction amounts.
- You can deduct the part of your medical and dental expenses if it amounts to more than 7.5 percent of your adjusted gross income.
State and local taxes – Federal law limits the deduction of state and local income, sales, and property taxes to a combined, total deduction of $10,000 ($5,000 for married taxpayers filing separate returns). Taxpayers cannot deduct any state and local taxes paid above this amount – regardless of what they paid.
Taxpayers can no longer deduct job-related expenses or other miscellaneous itemized deductions that exceed 2 percent of adjusted gross income. This includes unreimbursed employee expenses such as uniforms, union dues, financial advisor fees, and the deduction for business-related meals, entertainment and travel.
If you have a question about the specifics of any of the regulations stated above – or any other tax-related topic — just give TSPA a call – whether or not you are a client of ours. We will be happy to direct you to one of our highly trained CPAs and help you get answers.