www.qns.com I LIC COURIER I OCTOBER 2018 43
TAX TIPS
2018
Schedule A BY JOHN SAVIGNANO, CPA
IRS released a dra of the 2018 Schedule A. It reects the changes to
itemized deductions that were enacted under last year’s tax reform
law. Note that because of the higher standard deductions, far few
lers will itemize in 2018 than in the past years. Start with medicals.
e AGI threshold for deducting 2018 medical expenses stays at
7.5%. It goes back up to 10% for all lers beginning in 2019.
Turn to state and local taxes. is write-o is now capped at
$10,000 for Schedule A itemizers…$5,000 for couples ling
separately. Note that property and sales taxes remain fully deductible
for taxpayers in a business or for-prot activity. So, property taxes
paid on rental realty can be taken on Schedule E without regard to the
cap, and self-employeds and farmers can deduct on Schedule C or F
property taxes and sales taxes paid in their business.
Interest on home mortgages in nicked. Interest can be deducted on
Schedule A on up to 750,000 of acquisition debt on a primary and a
secondary residence…down from $1 million. is new limit gener-ally
applies to home mortgage debt incurred aer December 14, 2017.
Older loans and renancing’s up to the old loan amount get the $1
million cap. No write-o is allowed aer 2017 for interest that you
pay on existing or new home equity loans from which the proceeds
are used to buy a car, pay down credit card debt, etc. e law’s
crackdown on home equity loans doesn’t apply to debt secured by a
rst or second home and used to remodel or improve the place.
Interest on margin loans can still be written o. Investment interest
paid is deductible on Schedule A up to the amount of net investment
income reported.
e charitable contribution writeo is preserved, with a couple of
changes. e AGI limitation on cash donations to qualied charities
is hiked from 50% to 60%. Also, gis to colleges in exchange for the
right to buy choice seats at sporting events aren’t as valuable taxwise.
Under old law, donors were able to deduct 80% of the gi, even when
the value of the seat license they received in exchange for their
donation exceeded 20% of the donation. Congress eliminated this
break in the new tax law.
e deduction for personal casualty and the losses is a thing of the
past…Except for casualty losses incurred in presidentially declared
disaster areas.
All deductions that were subject to the 2%-of-AGI threshold are
gone. ese include unreimbursed employee business expenses, tax
preparation costs, investment account management fees, IRA
custodial fees paid by the account owner, hobby expenses to the
extent of hobby income, safe deposit box fees and many more.
But other miscellaneous write-os survive, such as personal
gambling losses to the extent of gambling winnings that are reported
on the rst page of the 1040.
e phaseout of itemized deductions for upper-incomers is
scrapped.
John Savignano is a partner with Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second Floor, in Long Island City. If you
have any questions or require additional information, please call John
at 718-707-0955.
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