Recent Tax Updates

Revised 2018 Schedule A due to Tax Cuts and Jobs Act Changes to Itemized Deductions

August 29, 2018

The Tax Cuts and Jobs Act made several changes to itemized deductions that will be in effect from 2018 – 2025. Due to these changes the 2018 Schedule A has been revised as follows:

  • Lines on the Schedule A have been renumbered.
  • Taxes You Paid Section has been altered as follows:
    • Line 5a – 5e: Includes Real Estate taxes, state and local income taxes/general sales tax and personal property tax with a subtotal line and a total deductible line for the lesser of the total of these taxes or $10,000.
    • Line 6 – For other deductible taxes that are not limited.
  • The Job Expenses and Certain Miscellaneous Deductions subject to 2% of AGI section was eliminated (old Lines 21 – 27).
  • The checkboxes for limiting itemized deductions have been removed.

For more details see the draft of the 2018 Schedule A on the IRS website.

As a reminder here are the changes that the Tax Cuts and Jobs Act made to itemized deductions:

  • Medical expense AGI threshold is 7.5% for 2018 for all taxpayers.
  • Taxes - Total Real estate and state and local income taxes/general sales are limited to $10,000.
  • Interest
    • Home mortgage interest is deductible only on the taxpayer’s principal residence.
    • Home equity loan interest is only deductible if it is for improvements to the principal residence.
    • 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.
  • Charitable Contributions
    • The AGI limitation is now 60% of AGI.
    • Payments made in exchange for college athletic seating rights are no longer deductible.
  • Personal casualty losses are only deductible if the loss was incurred in a federally declared disaster area.
  • 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.
  • Itemized deductions are no longer limited for higher income taxpayers.