by Is Itemized Deductions dead for most tax filers ??
If you’re used to claiming itemized deductions, trump tax reform (Tax Cuts and Jobs Act) may have a surprise in store for you and how you file your taxes.
The increased standardized deduction will be welcome news for many households. The law will eliminate and change some deductions for the upcoming tax year.
The majority of Americans are going to fall under the standard deduction, that may save taxpayers time as well as money.
New Standard Deduction : $24000
The best news from the trump tax reform law is an increase in the standard deduction to 12K & 24K.
Previously single taxpayers are only eligible for a $6,350 standard deduction, that amount will nearly double in 2018 to $12,000 for individuals.
Married couples will get a standard deduction of $24,000 for 2018, up from $13,000 for 2017, and head of household filers will see a bump in their standard deduction from $9,550 to $18,000 in 2018.
The ability to Itemize deductions allows around 30% of taxpayers to reduce their taxable income by claiming a variety of deductions instead of the standard deduction.
These deductions include
- Mortgage Interest
- State and local income or sales taxes
- Property taxes on their homes and cars
- Charitable contributions, and more.
Tracking Expenses : Look at your Past Taxes
Many Finance experts say, there may be no need for many people to save receipts or document spending since they likely won’t be itemizing deductions under the new law.
Tax Deductions That Will Disappear!
SALT deductions : Cap @ 10K
Starting in 2018, Unlimited state and local tax deductions known as SALT deductions will be capped at $10,000.
These taxes include state and local income or sales taxes, real estate taxes, and personal property taxes.
$1 million mortgage interest deduction
Another change that could disproportionately affect the rich living in states such as California, New Jersey and New York is the restriction on the amount of mortgage interest that can be deducted.
Currently, tax payers can deduct interest on a home mortgage of up to $1 million.
Starting in 2018, only interest on the mortgage value capped at $750,000 will be deductible.
Also, interest on home equity loans will no longer be deductible after 2017.
Moving Expenses Deduction
If you’re relocating for a new job, you may not be able to deduct your moving expenses from your taxes. Moving expense deduction is eliminated for everyone except armed forces members.
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