36 THE QUEENS COURIER • OCTOBER 4, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
TAX TIPS
2018
Schedule A
BY JOHN SAVIGNANO, CPA
IRS released a draft of the 2018 Schedule A. It reflects 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 filers will
itemize in 2018 than in the past years.
Start with medicals. The AGI threshold for deducting 2018 medical
expenses stays at 7.5%. It goes back up to 10% for all filers beginning in
2019. Turn to state and local taxes. This write-off is now capped at
$10,000 for Schedule A itemizers…$5,000 for couples filing separately.
Note that property and sales taxes remain fully deductible for taxpayers
in a business or for-profit 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. This new limit generally
applies to home mortgage debt incurred after December 14, 2017.
Older loans and refinancing’s up to the old loan amount get the $1
million cap. No write-off is allowed after 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. The law’s crackdown on
home equity loans doesn’t apply to debt secured by a first or second
home and used to remodel or improve the place.
Interest on margin loans can still be written off. Investment interest
paid is deductible on Schedule A up to the amount of net investment
income reported.
The charitable contribution writeoff is preserved, with a couple of
changes. The AGI limitation on cash donations to qualified charities is
hiked from 50% to 60%. Also, gifts 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 gift, 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.
The deduction for personal casualty and theft 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.
These 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-offs survive, such as personal gambling
losses to the extent of gambling winnings that are reported on the first
page of the 1040.
The 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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