I understand that the standard deduction and itemized deductions are an either/or option (you may use one or the other, but not both). How are itemized deductions going to work with the new tax code given that single filers are limited to $10,000, yet the standard deduction is set at $12,000?
The tax legislation is very new, and my response is based on what I have read thus far. To itemize under the new tax plan, you will probably need mortgage interest and charitable contributions to add to the $10,000 capped amount for state and local income taxes and property taxes.
For example, a taxpayer would want to consider itemizing if the amount of the capped state, local, and property taxes, plus mortgage interest and charitable contributions, exceeds the $12,000 standard deduction for a single person or $24,000 for married couples.
It looks like 2018 will be an interesting filing year.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.
Answered by: Scott Rubinsky, CPA, is a sole practitioner in Huntingdon Valley, Pa.