AARP Hearing Center
When you settle in to do your taxes this year — or sit down to talk to your accountant — you may be in for some surprises. The reason: This is the first year you’ll see the full effects of the sweeping tax reform bill that passed in late 2017.
That new law made a long list of adjustments to what you can and can’t write off, what you’ll owe and even which forms you can use. These five changes are among the biggest:
1. Chances are slim that you’ll itemize deductions.
The standard tax deduction filers could claim has nearly doubled its previous amount, so it is now $12,000 for single filers and $24,000 for married couples filing jointly. Plus, if you’re 65 or older and married, you can tack another $1,300 onto the standard deduction; as a single filer 65 or older, add $1,600.
At the same time, many itemized deductions have been eliminated or reduced. Most notably, the total deduction for state and local income and real estate taxes is capped at $10,000 (for singles and married couples filing jointly).
These changes could lead an estimated 90 percent of filers to take the standard deduction this year, up from the typical 70 percent, according to the Tax Policy Center.
For many people, this switch will mean less time digging up receipts and poring over bank and credit card statements to capture every single tiny deduction.
“It’ll be easier to figure out if you have to itemize,” says Patrick Daly, a CPA at the New York City accounting firm Citrin Cooperman. “Add up your charitable giving, mortgage interest and state and local taxes, and call it a day.” If that total is less than your standard deduction would be, chances are you can skip itemizing (one exception: if you have high medical expenses — see No. 4 below).
Keep in mind that some states let you itemize deductions when you file your state taxes even if you take the standard deduction on your federal return. States also may have different rules for what’s still deductible, so check.