The substantial increase in the standard deduction for 2018, as previously posted, means that a larger number of taxpayers will now take the standard deduction in lieu of itemizing. Factoring in the limit on state and local property taxes and new reduced mortgage interest limits, lets see what else could cause an increase in standard deduction usage for 2018 and beyond.
Casualty and Theft Losses
No longer deductible unless they are related to a loss in a federally declared disaster area. (such as major storms such as hurricanes, wildfires and floods)
Medical Expenses
One of the few items that affects 2017 returns and for 2018 only, the threshold is reduced to 7.5% of AGI – for taxpayers planning surgery and can bunch these expenses its time to consider this before this reverts to 10% of AGI effective 2019 tax year
State and Local Taxes
These taxes are now capped at $10,000. Same regardless if you are single or married. (substantial reduction to many taxpayers)
Miscellaneous Deductions
Completely eliminated under the code. This includes all reimbursed business expenses (meals, mileage etc), tax prep, fees, investment management fees. Sales people with substantial business miles need to factor this change immediately in their compensation packages
Employees and business owners heed: The ability to deduct business meals and entertainment has now been eliminated starting this year as this was previously 50% deductible.
Child Tax Credits/Personal Exemptions will be our next blog topic.