Taxpayers who itemize their deductions may be doing things that will affect the tax returns they file next year.
The higher standard deduction means fewer taxpayers are itemizing their deductions. However, taxpayers who still plan to itemize next year should keep these tips in mind:
- Deducting state and local income, sales and
property taxes.
The deduction that taxpayers can claim for state and local income, sales
and property taxes is limited. This deduction is limited to a combined,
total deduction of $10,000. It is $5,000 if married filing separately. Any
state and local taxes paid above this amount can’t be deducted.
- Refinancing a home. The deduction for
mortgage interest is also limited. It’s limited to interest paid on a loan
secured by the taxpayer’s main home or second home. For homeowners who
choose to refinance, they must use the loan to buy, build, or
substantially improve their main home or second home, and the mortgage
interest they may deduct is subject to the limits described in the next
bullet under “buying a home.”
- Buying a home. People who buy a new
home this year can only deduct mortgage interest they pay on a total
of $750,000 in qualifying debt for a first and second home. It’s $375,000
if married filing separately. For existing mortgages, if the loan
originated on or before Dec. 15, 2017, taxpayers continue to deduct
interest on a total of $1 million in qualifying debt secured by first and
second homes.
- Donating items and deducting money. Taxpayers must itemize
deductions to deduct charitable contributions and must have proof of all
donations.
- Deducting mileage for charity. Driving a personal
vehicle while donating services on a trip sponsored by a qualified charity
could qualify for a tax break. Itemizers can deduct 14 cents per mile for
charitable mileage driven in 2019.
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