With the recent changes to the IRS tax code, a lot of my clients have raised concerns about their standard deduction and how it will work going forward.
A tax deduction is an expense that we can subtract from our income before paying taxes on our income. For example, if I earn $100,000 per year, and I have a $10,000 tax deduction, I would only have to pay income taxes on $90,000. Taxpayers can either itemize individual tax deductions (such as qualified home mortgage interest and property taxes), or they can take a “standard deduction,” which is a flat amount. In 2017, the standard deduction was $6,350 for single taxpayers and $12,000 for married taxpayers who file a joint tax return. However, the new tax law doubled the standard deduction. In 2018, the standard deduction is $12,000 for single taxpayers and $24,000 for married taxpayers who file a joint tax return.
This rather significant increase in the standard deduction means that fewer people are likely to itemize their tax deductions moving forward. If all my itemized deductions added together are more than my standard deduction, I would probably choose to itemize. However, if all my itemized deductions (including qualified home mortgage interest and property taxes) are less than my standard deduction, I may as well just take the standard deduction… there’s probably no need to itemize in that case.
Be sure to check with a CPA for more details about how this may impact your specific situation.
PLEASE NOTE: THIS ARTICLE AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE ABOUT YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 501
About the Author
David Reznikow is a loan officer at Fairway Independent Mortgage. A Brookline native and BHS graduate, Reznikow is currently a Newton resident but has remained part of the Brookline community. As a Brookline Chamber of Commerce Director and business member Reznikow has had the opportunity to add to the vibrancy and diversity of the business community while helping to raise funds for local charitable organizations through many Chamber initiatives. Both Reznikow’s parents have businesses in Brookline, still live in the home where they raised three children, and can often be found playing with their grandson, Cameron, at Dean Park.