• Denise Hue

Standard vs Itemized Deductions

The 2017 Tax Cuts and Jobs Act made significant changes relating to standard and itemized deductions. The standard deduction is nearly doubled for Individual returns making it more likely that fewer taxpayers will claim itemized deductions and will take the standard deduction instead. 

If your itemized deductions total less than the standard deduction then there is no benefit to itemizing. The standard deductions for 2018 returns are:

$12,000 for single filers and married filing separately 

$24,000 for joint filers

$18,000 for head of household 

For 2018, the additional standard deduction amount for age and/or blindness increases due to cost-of-living adjustments to

$1,600 for single filers and heads of households, and at $1,300 for married filers (filing jointly or separately) and surviving spouses. 

Here is the kicker. The tax benefit of the higher standard deduction may be offset by the elimination of the personal/dependency exemption deduction. For example, for a family of three who each would have been eligible for a personal/dependency exemption deduction under prior law, the loss of those deductions (which under the prior law would have totaled $12,450 in 2018) is greater than the increase in the standard deduction under the TCJA (an $11,300 increase for joint filers). For larger households, the difference becomes even greater. 

For those taxpayers who do itemize this year, there are several changes. Most importantly, all miscellaneous itemized deductions subject to the 2% floor under current law are repealed through 2025. 

The deduction for state and local income or property taxes is capped at $10,000 ($5,000 for married taxpayers filing separately). 

The threshold for deducting medical expenses has been lowered to 7.5% of adjusted gross income (for 2017 and 2018 only). 

Moving expenses are not deductible, except for members of the armed forces on active duty who move pursuant to a military order and incident to a permanent change of station. 

Personal casualty losses are deductible only if the loss is attributable to a federally declared disaster. 

However, the overall limitation on itemized deductions has been suspended through 2025.

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©2020 by Denise Hue.