The Tax Cuts and Jobs Act of 2017 changed the landscape for taxpayers.
Because of the changes, far fewer people will itemize deductions. Standard deductions increased — $12,000 for singles and $24,000 for joint filers, from $6,350 and $12,700, respectively. Deductions for state and local taxes, or SALT, are now capped at $10,000.
But don’t despair, there are still some deductions you can take.
Do the math
“Many people won't bother to see if they can deduct medical expenses because they think the standard deduction is better. However, until you run the numbers and add up your mortgage interest, real estate taxes, out-of-pocket medical expenses, charity, etc., you won't know if you might fare better by itemizing,” says Abby Eisenkraft, CEO of Choice Tax Solutions in Melville.
State vs. federal
New York State allows certain deductions that the IRS eliminated. For example, moving expenses and out-of-pocket business expenses not reimbursed by your employer are no longer deductible on your federal tax return, but the state will let you deduct them if you have proper substantiation, says Eisenkraft.
Know too, that while SALT is capped at $10,000 for a federal deduction, the state income tax deduction for SALT no longer follows the federal deduction and isn’t subject to the $10,000 limit. Furthermore, a New York deduction for foreign real estate taxes is still available on the state return, even though it's not deductible on the federal return, points out Mark Luscombe, a principal analyst with Wolters Kluwer Tax & Accounting in Chicago.
Don’t miss out on medical expenses
The threshold for deducting medical expenses for 2018 has been reduced from 10 percent to 7.5 percent of adjusted gross income, making it more likely that more expenses may qualify for a deduction.