Mortgage Interest Deductions
- Mortgage debt incurred December 16, 2017 or later – You may deduct the interest paid on your mortgage up to a loan of $750,000. Any amount over that is not deductible.
- Mortgage debt incurred prior to December 16, 2017 – You may deduct the interest paid on your mortgage up to a loan of $1,000,000 which was the amount previously allowed for.
- Home Equity debt – Interest on Home Equity loans is suspended, unless you use the money to improve the home substantially and the total debt does not exceed its cost. Be sure to talk to your tax advisor prior to counting on a deduction for home improvement purposes.
- Previously you were allowed to write off all real estate property taxes.
- The new law limits the deduction to $10,000 which will affect those in high property tax areas.
- This deduction is now either your property tax plus state and local income tax or, your property tax plus sales tax.
Child Tax Credits
- If you have children under the age of 17, your tax credit doubles from $1,000 to $2,000 per qualifying child.
Standard Income Deductions
- Standard deductions doubled from $12,000 to $24,000 for married couples filing jointly.
- For some people this will eliminate “itemized deductions” unless those itemized deductions exceed $24,000. Examples of itemized deductions are property taxes, mortgage interest and charitable deductions just to name a few.
- Your charitable deductions were not taken away, however, the limit of cash contributions increased to 60% of your adjusted gross income versus the prior 50%.
- Remember that charitable deductions are considered itemized deductions.
Medical & Dental
- Medical and dental deductions, like charitable deductions are also “itemized deductions”.
- They are deductible if they exceed 7.5% of your adjusted gross income.
- However, in 2019, unless Congress makes any additional changes, this will increase to 10% of your “adjusted gross income.”.
- Due to the higher standard deduction and higher child tax credit, personal exemptions are eliminated.
Miscellaneous Itemized Deductions
- Miscellaneous deductions such as tax preparation, unreimbursed job expenses or investment expenses have been eliminated.