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Washington - It May Be Time To Stop Itemizing Your Taxes

Published on: December 6, 2018 11:00 PM
By: AP
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FILE - This July 24, 2018, file photo shows a portion of the 1040 U.S. Individual Income Tax Return form for 2018 in New York. The Child Tax Credit changed considerably in 2018. The standard deduction nearly doubled for 2018, leaving many taxpayers wondering whether it's financially worth it to itemize on their tax returns anymore. (AP Photo/Mark Lennihan, File)FILE - This July 24, 2018, file photo shows a portion of the 1040 U.S. Individual Income Tax Return form for 2018 in New York. The Child Tax Credit changed considerably in 2018. The standard deduction nearly doubled for 2018, leaving many taxpayers wondering whether it's financially worth it to itemize on their tax returns anymore. (AP Photo/Mark Lennihan, File)

Washington - Around this time of year, many taxpayers begin the annual ritual of pondering The Big Question: Do I take the standard deduction or spend time hunting for receipts and filling out extra forms to itemize? The decision largely boils down to whether itemizing will reduce your taxable income more than the flat, no-questions-asked standard deduction will, thus saving you money.

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But a major plot twist may make the issue even more vexing for some this tax season: The standard deduction nearly doubled in 2018 to $12,000 for single filers, $18,000 for heads of household and $24,000 for joint filers.

Generally, that means that a married couple filing jointly, for example, would now need to cobble together at least $24,001 in various tax deductions for itemizing to lower their tax bill more than taking the standard deduction would.

It’s a change that’s sure to leave some longtime itemizers wondering whether the standard deduction is actually the thriftier option this year. Here are four things tax pros say could indicate that it’s time to stop itemizing and take the standard deduction.

1. YOU DIDN’T PAY A LOT OF MORTGAGE INTEREST

The tax deductions for mortgage interest and property taxes have been boons to itemizers because they often add up to more than the standard deduction, says Andrew McCue, a certified public accountant at Weiss & Company in Glenview, Illinois. But if you didn’t pay much in property taxes, had a small mortgage or were at the tail end of your mortgage (where the payments were mostly toward principal and not much interest), these itemized deductions may not save you as much this year as the standard deduction could.

“If those are adding up to a substantial amount, that’s when you want to look at it and look at the standard deduction,” he says.

2. YOU USED THE DEDUCTION FOR STATE AND LOCAL TAXES

The federal deduction for state and local income taxes is popular among itemizers, but a new cap of $10,000 for joint filers this year means some people may be better off taking the standard deduction instead, McCue says.

But even with the cap in place, taxpayers who also have deductible mortgage interest might still save more by itemizing this year, he says. “In Illinois, it’s not hard for me to say I’ve got $6,000 of property taxes, but that varies a lot state to state,” he says. Add in another $6,000 for mortgage interest, and “just with those two items, you’re at the standard deduction for an individual,” he says.

3. YOU DIDN’T DONATE A LOT TO CHARITY

Charitable donations are a well-known tax deduction for itemizers, but if this year’s higher standard deduction gets you a bigger tax break, the tax-deductibility of your gifts may be a moot point, says Kasey Pittman, a CPA at Newport News, Virginia-based accounting firm PBMares.

“They’re not going to see that added benefit from donations, and I think once they figure that out, they’ll learn to plan their donations and to be more thoughtful about what year they give in and such,” she says.

For example, giving $5,000 to a favorite charity once every five years could save more money than giving $1,000 every year for five years. That’s because “bunched” donations, when combined with other itemized deductions, could get you over the higher standard-deduction threshold and make itemizing worthwhile financially, Pittman says.

4. YOU DIDN’T HAVE HUGE MEDICAL EXPENSES

In general, unreimbursed medical expenses that are more than 7.5 percent of your adjusted gross income may be deductible if you itemize, says Travis McMurray, a CPA at accounting firm Blackburn, Childers & Steagall in Tennessee. But the higher standard deduction could still be a better option.

“Quite honestly, you’d have to have a pretty significant medical event for that to kick in, or your income must be pretty low,” he says.



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Read Comments (8)  —  Post Yours »

1

 Dec 07, 2018 at 07:53 AM Educated Archy Says:

Yes thats the point. One post card. A simplified version. Of course silly people will say hey where is the post card. its not a literal post card. Most people e-file anyhow.

2

 Dec 07, 2018 at 09:36 AM TRump lies. Says:

TRump promised to simplify the tax code. BROKEN. Promised to reduce the number of tax brackets from seven to three. BROKEN. TRump promised largest tax reductions are for the middle class. BROKEN. TRump promised that Americans can deduct child care and elder care from their taxes. Tax free dependent care savings accounts for young and elderly dependents ... Provide matching contributions for low-income families to the dependent care savings accounts BROKEN PROMISES, BROKEN PROMISES.

3

 Dec 07, 2018 at 09:49 AM TRump's (un)intended consequences Says:

Item 3 illustrates why the new tax code damages non-profits. Shuls, yeshivot, cheders, special needs programs, etc.

Especially for people who live is states with large mortgages and large property taxes and state income taxes. (Like NY, NJ, IL, CA. Like where Jews live!)

Let's pray that these essential mosdos can thrive. Please donate with a lev some'ach, EVEN if the tax code is not as beneficial as it was before.

4

 Dec 07, 2018 at 11:01 AM Looney Liberals Says:

It's about time the liberals in NY, NJ and Cali pay their fair share of taxes like we do in the other 47 states.

5

 Dec 07, 2018 at 01:00 PM Educated Archy Says:

Reply to #2  
TRump lies. Says:

TRump promised to simplify the tax code. BROKEN. Promised to reduce the number of tax brackets from seven to three. BROKEN. TRump promised largest tax reductions are for the middle class. BROKEN. TRump promised that Americans can deduct child care and elder care from their taxes. Tax free dependent care savings accounts for young and elderly dependents ... Provide matching contributions for low-income families to the dependent care savings accounts BROKEN PROMISES, BROKEN PROMISES.

Trump promised a simplifed return and here it is one simple deduction No more itemizing
Trump promised large deductions for middle class and we got it. We almost all pay less.
Never heard the child tax deduction promise. i think you made that up. But either way instead of a deduction the middle class got a YUGE BIGGLY tax credit for kids in two ways.
1) The max income limit for the child credit used to be 110k for a couple. Now its 400k
2) It used to be 1k per child. now its 2k.

That's YUGE for frum jews.

You lie trump says the Truth. You report fake news.
Promises made promises kept.

6

 Dec 07, 2018 at 01:05 PM Educated Archy Says:

Reply to #3  
TRump's (un)intended consequences Says:

Item 3 illustrates why the new tax code damages non-profits. Shuls, yeshivot, cheders, special needs programs, etc.

Especially for people who live is states with large mortgages and large property taxes and state income taxes. (Like NY, NJ, IL, CA. Like where Jews live!)

Let's pray that these essential mosdos can thrive. Please donate with a lev some'ach, EVEN if the tax code is not as beneficial as it was before.

Stupid fake news illiteracy.

In NY & NJ most people still need to itemize their taxes.
1) Their mortgage interest due to high mortgages are high well over 10k. Add that with SALT and a minimum charity and its already over 24k even for a poor dude like me.
2) the main money which comes form wealthy people will still be itemized
3) Most frum people give tzedaka because we need to give tzedaka. sure we like the tax benefits. But we give whether or not it exists. And frankly did you ever to the math? All you save from a tax benefit of 10 k is $2,500. How many frum will say oh now I don't save so I won't give.

I listed 3 reasons why your torah is bogus.

Now I know that you are the spammer under ten diff screen names. its obvious and I hope vin bans you.

7

 Dec 07, 2018 at 02:00 PM Loony Liberals pay MORE than their fair share Says:

Reply to #4  
Looney Liberals Says:

It's about time the liberals in NY, NJ and Cali pay their fair share of taxes like we do in the other 47 states.

Blue state pay more taxes and get less benefits than the red states.

Using these formulas:

“Federal Contracts” divided by “IRS Collections”
“Grants” divided by “IRS Collections”
“Other Financial Assistance” divided by “IRS Collections”

States like NY, NJ, Cali, IL, CT (and others) subsidize Louisiana, Mississippi, Kentucky, Montana, Tennessee (and many others)

8

 Dec 09, 2018 at 12:30 AM Looney Liberals Says:

Reply to #7  
Loony Liberals pay MORE than their fair share Says:

Blue state pay more taxes and get less benefits than the red states.

Using these formulas:

“Federal Contracts” divided by “IRS Collections”
“Grants” divided by “IRS Collections”
“Other Financial Assistance” divided by “IRS Collections”

States like NY, NJ, Cali, IL, CT (and others) subsidize Louisiana, Mississippi, Kentucky, Montana, Tennessee (and many others)

Stop spreading fake news and lies. They by far get the biggest benefit. Almost half of the residence in NY and California pay no federal tax.

Now if you included all the illegals living in those states the number is way more than half.

These states want to support all their liberal programs then they should pony up. It's that simple.

9

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