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Reminder of 2018 Itemized Deduction Changes

January 16, 2019


As the 2019 filing season is almost upon us this is a reminder of the changes to the 2018 itemized deductions.

Here is a summary of the changes:

  • Taxes - Total real estate and state and local income taxes/general sales taxes are limited to $10,000.
  • Interest
    • Home equity loan, home equity line of credit or second mortgage interest is only deductible if it was used to buy, build or substantially improve the home (main or second) that secures the loan.
    • Home mortgage interest is limited to $750,000 for homes purchased on or after December 15, 2017. The limit remains at $1,000,000 for homes purchased before that date.
    • Home mortgage interest remains deductible for interest paid on loan secured by the taxpayer’s main or second home.
  • Personal casualty losses are only deductible if the loss was incurred in a federally declared disaster area.
    • The FEMA disaster declaration number will now be required to be entered on Form 4684 (Casualties and Theft).
  • Miscellaneous itemized deductions subject to the 2% AGI floor are no longer deductible. This includes the Employee Business Expenses that were reported on Form 2106.
  • Medical expense AGI threshold is 7.5% for 2018 for all taxpayers.
  • Itemized deductions are no longer limited for higher income taxpayers.
  • Charitable Contributions
    • The AGI limitation is now 60% of AGI.
    • Payments made in exchange for college athletic seating rights are no longer deductible.

For more details see the final 2018 Schedule A and instructions on the IRS website.

Also, see IRS Publication 5307 (Tax Reform Basics: For Individuals and Families) for more information on the itemized deduction changes and other tax law changes that will affect individuals this filing season.

Recent Tax Updates

When a Rental Activity Can Be Included as Qualified Business Income
March 19, 2019

Safe Harbor Rule for Autos that Claim Bonus Depreciation
February 27, 2019

2018 Federal Return and Taxpayer Expectations
January 30, 2019

Reminder of 2018 Itemized Deduction Changes
January 16, 2019

Qualified Business Income Deduction (20% Deduction for Certain Pass-Through Income)
January 9, 2019

Reminder of Form 1040 Redesign
January 2, 2019

Additional Updates
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