Filing 2018 taxes will be the first time many Americans experience the full effects of the Tax Cuts and Jobs Act signed into law in December 2017. The new law brings a number of changes to deductions applying to individuals for tax years 2018 through 2025.
The standard deductions nearly doubled – $12,000 for single and $24,000 for married filing jointly in 2018. You may not need to itemize your deductions.
The itemized deduction for state and local taxes (SALT) is now limited to a maximum of $10,000. This deduction is a combination of property tax, state and local income tax or sales tax.
Acquisition indebtedness on mortgages incurred after December 16, 2017, you can deduct the interest up to $750,000 (previously $1 million.) Home equity loan interest deductions are suspended unless you use the money to improve the home.
Charitable donations for cash contributions increased to 60% of adjusted gross income, up from 50%. You must itemize your deductions to claim charitable donations.
For 2018, you can claim medical and dental expenses as itemized deductions that exceed 7.5% of AGI. In 2019 the floor for medical and dental expenses will be 10% of AGI.
Personal exemptions for 2018 to 2025 have been eliminated.
Beginning 201, the TCJA doubles the child credit to $2,000 per qualifying child under age 17. Since this is a tax credit which reduces your tax bill dollar for dollar, this is a significant benefit.
Miscellaneous itemized deductions subject to the 2% AGI floor are eliminated. These include unreimbursed job expenses, investment expenses, and tax preparation fees.
2018 is a tax year that will result in whether or not you get a refund. The result may be totally different than in the past. You may need to adjust your W-4 for next year. Speak to your accountant.