Recent tax reform has changed the way taxpayers will do taxes for the 2018 tax year. The new law increased the standardized deduction, meaning many taxpayers will prefer to use the standardized deduction instead of the itemized approach. Before you decide which is best for your family, take a minute to review some of the more popular deductions that remain applicable in 2018.
The Tax Cuts and Jobs Act repealed many popular tax deductions, but not all. Three deductions taxpayers can continue to take advantage on their 2018 tax returns this coming April include:
- Medical and dental expenses. Keep track of those receipts. Payments related to medical and dental care for you, your spouse and any children are deductible, but there is a limit. Taxpayers can deduct any of these expenses that exceeds 7.5 percent of the taxpayer’s adjusted gross income. A taxpayer that averages an adjusted gross income of $50,000 could deduct any medical or dental payments that exceed $3,750.
- Certain tax payments. Taxpayers can deduct local and state taxes, up to $10,000. Certain personal property tax payments as well as foreign, local and state real estate or income tax payments are also deductible.
- Expenses connected to the home. Homeowners can deduct mortgage interest paid on loans under $750,000 if married and filing joint returns. Those who sold a home can also exclude up to $250,000 in gains from reported income.
- Education. The Internal Revenue Service (IRS) also allows for deductions for education expenses, including up to $2,500 per student for four years of higher level education and up to $2,500 in student loan interest payments.
Additional deductions are available. It is important to retain receipts and documents needed to support the deductions. In the event of an audit, this documentation is needed to support your returns.
