Has the TCJA changed anything for Itemized Deductions?
Due to the Tax Cuts and Jobs Act many things have changed in the Schedule A. Below is a listing of each item on Schedule A, as well as if anything changed for these deductions.
Beginning in tax year 18 the standard deduction has been increased to $12,000 for Single/MFS, $24,000 for MFJ/Qualifing Widow(er), and $18,000 for Head of Household. This amount has been increased so significantly because beginning in tax year 18 you are no longer able to claim a personal exemption for anyone on the return. For more information, please see the related links below that outline the Standard Deduction, as well as the 1040 Instructions.
Medical and Dental Expenses
Nothing has changed on this section, the calculation is still 7.5% of AGI. The 7.5% began in Tax Year 17, the percent in prior years was 10%.
State and Local Income Taxes
In years prior to 2018, you would list the full amounts on each of their respective lines and then combine the entirety of these. Beginning in 2018, you will still combine the total of these taxes, however, there is a limitation to the amount that you can deduct of these taxes. The limitation is $5,000 if you are MFS, and $10,000 for all other filing statuses. Once you add these amounts, you will then add all Other Taxes to your total. The allowed amount for each tax entered is shown on Wks SALT. See Related Links for details.
Deductible Mortgage Interest
In previous years, the deductible mortgage interest was $1 million, plus $100,000 of home equity interest. Starting in 2018, only $750,000 is eligible to be deducted. Also, beginning in 2018, Home Equity Loans that are not used to improve, or purchase the home, are not deductible on Schedule A.
Gifts to Charity
In prior years, the cap on this had been 50% of the taxpayer's AGI could be deducted as a gift to charity. Beginning in 2018, the limit for this has been increased so that 60% of the Taxpayer's AGI can be deducted as gifts to charity.
Casualty or Theft Losses
Prior to Tax Year 2018, all you would need to do is fill out the 4684 for any loss and this could be deducted (with limitations) on the Schedule A. Beginning in Tax Year 2018 you cannot deduct any casualty or loss unless it is the result of a loss from a federally declared disaster. In the case of a federally declared disaster, the taxpayer would be registered with FEMA and have an account number. This account number will be required on the 4684 when filing. Some states may still allow losses from casualties other than from a federally declared disaster.
Unreimbursed Employee Expenses
Beginning in Tax year 2018, unreimbursed job expenses are no longer allowed except for certain armed forces personnel, fee based government officials, and performers in the entertainment industry. See Related Links for details.
Other Miscellaneous Deductions
There is no change to these deductions. There are still only a few types of other miscellaneous deductions for which one can take a deduction on Schedule A.
In prior years, there was a limit to the amount that could be deducted on the Schedule A for Itemized Deductions. Beginning Tax year 2018, this has been removed, therefore there is not a limit.
Note: the previous changes listed are for the Federal returns. In some cases the states will not conform to each of these new laws, and could still allow a deduction that has been removed, or altered on the Federal return. Please see all state instructions for further guidance.