All the talk is that the new Tax Law made such huge changes to itemized deductions that many will simply not look to take many past popular write-offs, and simply use the hugely expanded standard deduction. But for some, following this strategy blindly may miss expanded deduction opportunities. Let’s take some time to review what still can be itemized.
Medical expenses are still deductible and limited to the excess over 7.5% of adjusted gross income. Here is the list that the IRS has in the draft of the instructions for 2018:
- Prescription medicines or insulin.
- Acupuncturists, chiropractors, dentists, eye doctors, medical doctors, occupational therapists, osteopathic doctors, physical therapists, podiatrists, psychiatrists, psychoanalysts (medical care only), and psychologists.
- Medical examinations, X-ray and laboratory services, insulin treatment, and whirlpool baths your doctor ordered.
- Diagnostic tests, such as a full-body scan, pregnancy test, or blood sugar test kit.
- Nursing help (including your share of the employment taxes paid). If you paid someone to do both nursing and housework, you can deduct only the cost of the nursing help.
- Hospital care (including meals and lodging), clinic costs, and lab fees.
- Qualified long-term care services (see Pub. 502).
- The supplemental part of Medicare insurance (Medicare B).
- The premiums you pay for Medi-care Part D insurance.
- A program to stop smoking and for prescription medicines to alleviate nicotine withdrawal.
- A weight-loss program as treatment for a specific disease (including obesity) diagnosed by a doctor.
- Medical treatment at a center for drug or alcohol addiction.
- Medical aids such as eyeglasses, contact lenses, hearing aids, braces, crutches, wheelchairs, and guide dogs, including the cost of maintaining them.
- Surgery to improve defective vision, such as laser eye surgery or radial keratotomy.
- Lodging expenses (but not meals) while away from home to receive medical care provided by a physician in a hospital or a medical care facility related to a hospital, provided there was no significant element of personal pleasure, recreation, or vacation in the travel.
- Ambulance service and other travel costs to get medical care. If you used your own car, you can claim what you spent for gas and oil to go to and from the place you received the care; or you can claim 18 cents a mile. Add parking and tolls to the amount you claim under either method.
- Cost of breast pumps and supplies that assist lactation.
- Medical and dental insurance premiums
So add it all up and remember to reduce by any reimbursements from insurance you received and estimate your adjusted gross income threshold.
$10,000 of deductions are still $10,000 of deductions! So, for those in high real estate or income tax states, that’s a significant percentage of a standard deduction, a long way toward the determination that standard deduction might not be enough.
Remember, the rules for deducting interest vary, depending on whether the loan proceeds were used for business, personal, or investment activities. Also, the limits on loans have important milestone dates based on whether the date the debt was taken out either on or before December 15, 2017 or after that date. But if you haven’t refinanced since that date, the rules didn’t change. So consider using your 2017 amount for this determination.
Generous ones, add all of those letters and notices of the deductible amount that you were sent. Don’t forget your travel to events you volunteered for charity. Property you contributed is also still deductible.
One of the lost deductions are casualties which are not part of federally declared disasters. Only add the qualifying ones. The infamous other deductions are mostly gone. Look at the instructions if you have something specific but for these purposes, ignore it.
Add all of this up and if it is more than $12,000 for a single, or $24,000 for a married couple, you are one of the 30% that the IRS seems to neglect to talk about, when they say most everyone will simply take the standard deduction.
Let’s work together to make your 2018 return a money-saving masterpiece and work to cut your tax bill to the bone by claiming all of the tax write-offs that you deserve.
Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/tax-offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.