A. Under the Tax Cuts and Jobs Act of 2017, the standard deduction was consolidated with personal exemptions to create a new, higher standard deduction… which in total was only slightly higher than the prior combination of the two, but nonetheless will substantially curtail how many households can itemize their deductions at all.
As in 2017, couples claimed a $12,700 standard deduction and $8,100 in personal exemptions for a total of $20,800, and in 2018 they will claim a single consolidated $24,000 standard deduction… which means while total deductions went up just $3,200 from $20,800 to $24,000, the threshold for itemizing went up a massive $11,300 from $12,700 to $24,000. And at the same time, the number of itemized deductions themselves were also curtailed with the elimination of miscellaneous itemized deductions.
However, many deductions are still available “above the line” (claimed on the front page of the tax return to calculate Adjusted Gross Income in the first place, and not in the “itemized” category). The most popular above-the-line deductions that are still available going forward, including the following:
- Traditional IRA contributions of $6,000 in 2019 (which as long as the individual has earned income and isn’t a high-income active participant in an employer retirement plan as well);
- Student loan interest;
- Alimony payments (but only for divorce settlements that had already taken place prior to December 31st of 2018);
- HSA contributions;
- Various deductions for the self-employed, including self-employment taxes (the self-employed individual’s 50% share of payroll taxes), retirement plan contributions, and health insurance; above-the-line teacher expenses;
- and certain low-income performing artist expenses.