What’s Left for Itemized Deductions After the 2017 Tax Cuts and Jobs Act?
With the doubling of the standard deduction and elimination or reduction of several itemized deductions, you might think there aren’t many opportunities left to itemize. That isn’t the case at all, depending on your circumstances. With the recent tax reform, it’s never been a better time to figure out what you can still itemize in 2018 and in future tax years. To keep track of these deductible expenses, it’s important to be organized and maintain a box or folder to store your receipts throughout the year. This level of organization is necessary whether you work with a tax professional or prepare your own taxes.
Deductions fall into these categories:
- Medical and dental expenses
- Taxes you paid
- Interest you paid
- Gifts to charity
- Casualty and theft losses
- Other miscellaneous deductions
Certain categories, including medical and dental expenses, casualty and theft losses, are subject to a floor that only permits you to deduct expenses above certain thresholds, such as 7.5% of your adjusted gross income (AGI – IRS Form 1040, line 38). Your AGI is your total amount of income from all sources after subtracting certain deductions, such as alimony paid, HSA contributions, the deductible part of self-employment taxes, etc. For example, if your AGI is $100,000 and the threshold for medical expenses is 7.5%, then any qualifying expenses above $7,500 can be included and deducted. (more…)
