Will you take standard or itemized deductions for the 2018 tax year?
You can also deduct the interest you pay on mortgage loan from your taxes but the limits have changed. For couples filing jointly you can deduct interest up to $750,000 instead of the allowable $1 million in 2017. If you are married taxpayers filing separately, the deductible amount is $375,000, instead of the previous $500,000.
It used to be that you needed to spend 10% of your adjusted gross income on qualifying medical expenses. Now you need only spend 7.5%. That means you will be able to deduct more of your medical bills if itemize.
The new tax law also lowers capital gains taxes for most taxpayers. The decrease is a result of a shift in how capital gains income limits line up to the new tax brackets installed this year. If you benefit from capital gains, you can keep more of your investment for yourself.
However, if you’re used to itemizing, this year might be difficult. What it means is if you file as single, your itemized deductions will have to exceed the standard deduction of $12,000. If not, you will get the standardized deduction. For married filing jointly, your deductions will need to exceed a standard deduction of $24,000.
Here’s the bottom line: To itemize, your itemized deductions have to exceed your standard deduction.
So what is the best route for filing this year? Use a tax preparer. Les Merritt, CPA and CFP (Certified Financial Planner) makes it his business to know about the new laws and how they will affect his clients. With the wide-sweeping changes this year, your accountant will need to investigate both personal and business tax changes. Not only your individual taxes but those of your corporation if you own a business and pay corporate taxes may be different. He or she may have to figure your taxes with itemized deductions and with standard deductions.
Les Merritt has been helping individuals, families and businesses with their taxes for over three decades. He and his staff have been helping clients to take all allowable deductions and reduce their tax burdens during this time. Les looks forward to serving you. Call at (919) 269-8553 to set an appointment Take care of last year’s tax return and those in the future. Planning for next year’s taxes can begin now so that even though you may not have made the moves in 2018, you can begin making the changes to reduce your taxes next year. Call today to take care of your tax filing this year and to secure your future.