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Reminder of 2018 Itemized Deduction Changes

As the 2019 filing season is almost upon us this is a reminder of the changes to the 2018 itemized deductions.

Here is a summary of the changes:

  • Taxes – Total real estate and state and local income taxes/general sales taxes are limited to $10,000.
  • Interest
  • Home equity loan, home equity line of credit or second mortgage interest is only deductible if it was used to buy, build or substantially improve the home (main or second) that secures the loan.
  • Home mortgage interest is limited to $750,000 for homes purchased on or after December 15, 2017. The limit remains at $1,000,000 for homes purchased before that date.
  • Home mortgage interest remains deductible for interest paid on loan secured by the taxpayer’s main or second home.
  • Personal casualty losses are only deductible if the loss was incurred in a federally declared disaster area.
    • The FEMA disaster declaration number will now be required to be entered on Form 4684 (Casualties and Theft).
  • Miscellaneous itemized deductions subject to the 2% AGI floor are no longer deductible. This includes the Employee Business Expenses that were reported on Form 2106.
  • Medical expense AGI threshold is 7.5% for 2018 for all taxpayers.
  • Itemized deductions are no longer limited for higher income taxpayers.
  • Charitable Contributions
    • The AGI limitation is now 60% of AGI.
    • Payments made in exchange for college athletic seating rights are no longer deductible.

For more details see the final 2018 Schedule A and instructions on the IRS website.

Also, see IRS Publication 5307 (Tax Reform Basics: For Individuals and Families) for more information on the itemized deduction changes and other tax law changes that will affect individuals this filing season.

Mark Castro, CPA

Mark Castro, CPA

Mark has been with CrossLink Professional Tax Solutions (CPTS) since 2008, but has been in the tax industry since 1990. As the government/tax industry liaison for CPTS, Mark has been very active in working with the IRS, States, and other tax industry members to help improve communications, promote standardization, and simplification of eFile systems. Mark has also been active with industry associations as a board member of the National Association of Computerized Processors (NACTP) and the Council of Electronic Revenue Communication Advancement (CERCA) for many years. These two associations work with the IRS and States to help solve key eFile and electronic tax system issues and work to improve the operations of the State and IRS eFile systems.
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