The 2018 tax law changes introduced a much larger standard tax deduction than ever before. At $12,000 for single taxpayers and $24,000 for married filers, this standard deduction may slowly do away with itemized deductions. When filing, you may claim the largest deduction. Either the standard deduction available to you based on your filing status or the sum of your itemized deductions. The standard deduction involves less work as it alleviates the burden of accounting for and reporting all of the individual items. But for some, itemized deductions may still yield the greatest return.
In March we discussed Workplace Tax Deductions that are available, depending on your career. Volunteering can also create some opportunities for itemized deductions as we explored in June. Additionally we’ve shared tax breaks that are available to students in 2018. Here we look at some additional personal tax deductions to consider if you are planning to itemize deductions.
Financial expenses accrued throughout the year are often viable as deductions, so save your receipts for financial services. Examples include the cost of preparing your income taxes. This includes tax software and filing fees or preparation fees if you see a professional. Additionally, money spent for financial planning, can be claimed as well. By preparing for your financial future through financial planning services or creating a living will, you can also enjoy the benefits of financial returns in the present when deducting these expenses.
Pumps and aids for nursing moms are just some of the reimbursable medical expenses that can be realized, depending on your medical needs throughout the year. In order to claim medical expenses as an itemized deduction, they most total more than 7.5% of your AGI (adjusted gross income). This amount increases to 10% in 2019 and will mean only those with high medical expenditures will be able to realize these deductions.
Finally, if you are paying mortgage interest on a loan secured by your residence, whether it be a first or second home, this is acceptable as an itemized deduction. You cannot claim payments on the principal nor can you claim if you have not been making payments.
For a full list of available deductions with explanations, the IRS website is a great place to check out: https://www.irs.gov/credits-deductions-for-individuals. Remember to save receipts and paperwork throughout the year to make deducting easier at tax time!
Did you know that your vacation may be tax deductible as well? We will explore this in greater detail in the next installment.