Due to the changes for the 2018 tax year, many of you will no longer benefit from claiming your deductions, also known as itemizing. The dollar amount you will need in these deductions to benefit is much higher under the new laws. When you itemize, you "write off" your mortgage interest, property taxes, charitable donations and other allowable deductions to lower your tax instead of using the standard deduction. For those of you that have been using the standard deduction on past returns, these changes will likely benefit you the most.
The standard deduction is a set amount that you may deduct from your income and is the same for everyone based on their filing status. If your deductions are higher than the standard for your filing status, we use your deductions (itemize). If your deductions are lower than the standard, we use the standard, as higher deductions =lower taxes.
As always, for the 2018 tax year, you have a choice to use their own deductions or take the standard deduction. The difference for 2018 taxes is government has doubled the standard deduction for each filing status for the 2018 tax year. For example, the 2017 standard deduction for married filer was 12,900 and for 2018 this has been raised to 24,000. So where last year you needed over 12,900 to use your own deductions, this year they will have to be over the 24,000 mark to benefit you.
Keep in mind it doesn't mean that you will lose out if you are not able to use your deductions as the new standard deduction might be higher than your itemized deductions were on your 2017 return. Again, whether you use the standard or your own "itemized" deductions, the higher number of the two will equal less tax.
Here at CMS Tax Plus, we will be evaluating which is best for our clients on a case by case basis and will do what is most beneficial for our clients.