What Happened to All My Eligible Itemized Deductions?

IRS personal Tax forms with pencil and calculator

In recent years, you may have noticed that your tax preparer has been recommending that you take the standard deduction for your federal income tax return instead of keeping track of your eligible itemized deductions. But why is this? Is your tax preparer tired of itemizing deductions?

The answer lies in the Tax Cuts and Jobs Act (TCJA), which took effect on January 1, 2018. The TCJA increased the standard deduction and eliminated many of the itemized deductions that were once eligible. As a result, the standard deduction is often higher than the total of itemized deductions and is more likely to lower your tax liability.

Itemized Deductions That Are No Longer Eligible

Some expenses that you may be used to deducting from your tax bill that you can no longer claim are unreimbursed business expenses, tax preparation expenses, investment expenses, and safe deposit box fees. Other expenses that are not deductible include legal expenses for personal matters, commuting expenses, expenses for attending a seminar or conference, and club dues.

Itemized Deductions You Can Still Take

At this point you’re probably wondering, then which itemized deductions can I still take? You can still deduct medical or dental expenses that exceed 7.5% of adjusted gross income, as well as certain charitable contributions limited to 60% of AGI. You can also deduct state and local income or sales taxes paid, along with real estate and property taxes paid, up to a total of those combined taxes of $10,000. Other eligible deductions include gambling losses, mortgage interest, mortgage insurance premiums, and personal casualty and theft losses attributable to a federally declared disaster.

So, Should I Still Itemize?

If your combined eligible itemized deductions are greater than the standard deduction for your filing status, then yes, you should still itemize. But due to the increase in standard deductions, it’s possible that your tax preparer will recommend that standard deduction instead.

If you want a better idea of whether you should itemize or not, read our blog post on should I choose the standard or itemized deduction option.

If you can’t decide what to do, we’re here to give you answers. Contact one of our tax preparers for more help.

**Please keep in mind: Tax laws, eligibility requirements, and rates change often, and these lists are not exhaustive. Always contact a tax preparer for the most up-to-date information.