Medical and Dental expenses. The haircut for medical expenses is 7.5% of AGI. The 2018 medical mileage rate is 18¢ per mile.
Taxes You Paid. On the 2018 form, Line 5 is a through e. These other lines are for state and local real and personal property taxes and for limiting all state and local income, sales and property taxes to $10,000. There is a line 6 for other taxes. The IRS instructions for this line are : a.) Do not include any taxes paid to a US Possession on this line, include them above on the state and local tax line. b.) Do not include federal estate tax on IRD. Use line 16 for estate tax on IRD. c.) Foreign taxes paid on real estate are not deductible.
Interest You Paid. There is a new checkbox to Line 8, and it should be used if the taxpayer didn’t use all of the home mortgage proceeds from those loans to buy, build, or substantially improve their home. The Mortgage interest deduction is limited as follows: a) Mortgage interest is deducted only on the first $750,000 ($375,000 if married filing separately) of indebtedness on idebtedness incurred after Dec 15, 2017. The old higher limits ($1,000,000) apply for taxpayers that are deducting mortgage interest from indebtedness incurred on or before Dec. 15, 2017. b) No matter when the indebtedness was incurred, taxpayers can only deduct the interest from a loan secured by their home to the extent the loan proceeds were used to buy, build, or improve their home. The other interest is non-deductible. PreThe deduction for premiums for mortgage insurance paid to buy a residence is currently gone. Investment interest deduction remains intact.
Gifts to Charity. The limit for the total amount of deductible charitable contributions, in most cases, is now limited to 60% of the taxpayer’s contribution base, instead of the 50% limit that applied in prior years. Charitable contributions of money for relief efforts in the 2017 California Wildfire area, that were made during the period beginning on Oct. 8, 2017, and ending on Dec. 31, 2018, are not subject to the 60%, 30% or 20% of AGI limitations that otherwise apply to charitable contributions. The charitable mileage rate is 14¢ per mile.
Casualty or theft losses. Only caualty and theft losses that are a result of a federally declared disaster area are deductible. Personal casualty or theft loss are not deductible. Net qualified disaster losses are entered on line 16, in the section Other Itemized Deductions.
Other Itemized Deductions. The federally declared disaster that occurred in 2016, as well as those sustained from Hurricane Harvey or Tropical Storm Harvey, Hurricane Irma, Hurricane Maria, or the California wildfires are qualified losses. Net qualified disaster losses are the net of qualified disaster losses and gains from qualified disasters. Form 4864 must be used and there is guidance for use of that form for Net Qualified Disaster Losses. "‘Job Expenses and Certain Miscellaneous deductions’’ has been eliminated. Other Itemized deductions are no longer limited based to 2% of AGI.
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