What can I deduct on taxes?

January 24, 2019 | Becca Denison

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By Becca Denison, MAcc

Congratulations! You have made it through 2018. Now, it’s time to begin planning so that you can take advantage of the tax breaks the Tax Cuts and Jobs Act of 2017 has to offer. In its inaugural year, this act will likely impact you and your taxes. Below is a list of deductions you may recognize, others that have changed, as well as a few you may not be aware of.

Itemized deductions

1. Unreimbursed medical and dental expenses in excess of 7.5% of AGI which includes home renovation expenses that improve your home for medical purposes such as installing a wheelchair ramp
2. State and local income, sales and property taxes up to $10,000 per calendar year ($5,000 for married filing separate)
3. Charitable cash donations up to 60% of AGI
4. Expenses for charity work such as the cost of mileage if you drove yourself to and from the volunteer site, purchasing uniforms or required parking garage fees
5. Mortgage interest on loans used to buy, build or improve your home. Interest deductions on mortgages in excess of $750,000 ($375,000 if married filing separate) may be limited depending on the date of acquisition.
6. Gambling losses up to gambling winnings 

If you choose not to itemize your deductions, you may take the standard tax deduction. The standard deduction for married filing jointly and qualified widow(er)s is now $24,000. For single filers and married filing separate taxpayers, that deduction is $12,000. And for head of household filers, the standard deduction is $18,000.

Other deductions/credits

1. Jury duty pay that was turned over to your employer, who paid your salary while you were serving on jury duty
2. Moving expenses for military members
3. Mortgage points used to purchase or build your primary home
4. Gains on the sale of your primary residence up to $500,000 ($250,000 if filing single) can be excluded from income
5. Alimony payments if divorced before Dec. 31, 2018
6. Personal casualty and theft losses only if they occurred in a federally declared disaster area
7. Travel expenses such as transportation, meals and lodging for military reservists who travel 100 miles or more from home
8. Health savings account (HSA) contributions made by you or anyone other than your employer to your HSA account
9. Up to $4,000 of higher education tuition and fees if paid for yourself, your spouse or a dependent
10. Unreimbursed expenses for books, supplies and computer equipment up to $250 for K-12 educators who worked at least 900 hours in a school year
11. Qualified student loan interest up to $2,500 during the year, subject to income limitations
12. The American Opportunity Tax Credit allows up to $2,500 per student for four years of postsecondary education, subject to income limitations.
13. The child tax credit increased to $2,000 per qualifying child along with increased income limits 

Deductions only for self-employed individuals

1. Tax preparation fees
2. Premiums for medical and dental insurance
3. Car registration fees
4. Professional society membership dues
5. Required uniforms or specialized clothing purchased for work
6. 50% of work-related meals
7. Home office deduction if part of the home is regularly used for business and the home is the primary place of business
8. Business expenses during work-related travel such as airline baggage fees and use of personal car

Although the list is not exhaustive, it does highlight many of the popular deductions and credits that taxpayers should be aware of as April quickly approaches. With multiple changes to the tax rules, make sure to get an early start and take the time to ask questions.