![]() ![]() The limit also applies to sales tax for taxpayers who live in states with no income tax and have been able to deduct sales tax. 31, 2018.Īnd beginning in 2018, there's a new $10,000 cap on deductions for a combined amount for personal property, real estate and state and local income taxes. The loan would still be deductible if the money goes toward building, acquiring or substantially improving the home.Īlimony payments won’t be deductible if the divorce takes place after Dec. Some expenses will no longer qualify for a deduction beginning in 2018. For example, interest on home equity loans will no longer be deductible beginning in 2018, if the loan was used on things like paying for college tuition, taking a vacation or buying a new car. "But those with significant expenses will still benefit from the deduction, especially in 2018 when the threshold remains at 7.5%."īut you have to pay attention to other changes in the tax rules too, as part of tax reform. "Going forward, the higher standard deduction will eliminate the medical deduction for some," said Patricia Bojanic, a certified public accountant at Gordon Advisors in Troy. For singles the standard deduction increases to $12,000 in 2018, up from $6,3. The standard deduction increases in 2018 to $24,000 for married couples filing a joint return - up from $12,700 in 2017. 2018 changesįor 2018, many new rules out of tax reform will hit. The reason? The lower threshold only applies to 20. Beginning in 2019, the threshold for the deduction for medical expenses will be 10% unless Congress moves to change that rule. Tax planning for 2018 could include taking care of big medical issues now - instead of waiting until next year. So, if you had $2,000 in qualifying expenses in this example, you'd be able to claim $500 in deductions for medical expenses.īut here's another point: You must have enough other deductions, such as charitable contributions, mortgage interest, state and local taxes, to itemize and exceed the standard deduction.īernie Kent, chairman of Schechter Investment Advisors in Birmingham, said seniors want to keep that 7.5% threshold in mind for their 2017 returns - and as they contemplate any optional surgery or dental work that would lead to high out-of-pocket expenses in 2018. And only expenses after that amount would qualify for a deduction. If you have $20,000 in adjusted gross income, for example, you'd need at least $1,500 in qualifying medical expenses during 2017 to hit the threshold. Tough to qualifyĬlaiming the deduction still isn't easy for many taxpayers. If nothing changed, taxpayers would have been able to claim nonreimbursed medical expenses that exceeded 10% of adjusted gross income on the 2017 return - a tougher hurdle than 7.5%. ![]() "Instead of eliminating the deduction, they improved it for the taxpayer," said Gil Charney, director of tax law and policy analysis for The Tax Institute at H&R Block. Such a move, for example, would have hurt seniors who were paying for long-term care not covered by Medicare or private insurance, as well as those with sizable out-of-pocket medical expenses. Taxpayers are able deduct medical expenses paid only in the same tax year as the return.Įnding the deduction, of course, would have been devastating for seniors and other families facing serious health challenges. The same threshold will apply for 2018 returns, too. The threshold is retroactive for 2017 and can be used this year when filing your returns. But seniors could be overlooking some good news for deductions for medical expenses.Īt one point, the heated debate on tax reform called for eliminating the deduction for medical expenses entirely.īut the major tax reform package that Congress passed in late December kept that deduction and put the threshold for claiming medical expenses at 7.5%. ![]() Some retirees are grumbling that young families are getting a better deal under tax reform. ![]()
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