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Standard Deduction vs Itemizing in 2019!! | Mark J. Kohler | Tax and Legal Tip

Hey mark Kohler here and we're gonna talk about standard deduction versus itemizing now for everybody out there

You're an American you're gonna have to file a 1040 tax return and the rules have changed

Starting in 2018 until 2023. So you want to know the difference here because it could save you big-time on your tax return

All right, the general rule is you want to add up your itemized deductions and compare them against your standard deduction which everyone's greater

That's the one you want to take. Now, you're gonna find out pretty quickly that my item i's deductions, aren't that great

So you're gonna generally stick with standard deductions and not waste your time adding those up

But you want to know the rule so that you know when it's time to take that extra effort and figure out which one's better

Now the rules are now in

2018 2019 and tell the foreseeable future in 2023. They may get all changed up again is

$12,000 standard deduction if you're single

$24,000 if you're married finally joint now, that's where you're gonna fall on the standard deduction

Spectrum and then again compare it against the itemized deductions. Okay. Now there's five itemized deductions

You want to track the first one is medical

Now what medicals could include is all of your out-of-pocket medical expenses? Not your medical insurance?

But out-of-pocket medical like dental eyes co-pays deductibles

prescription drugs

acupuncture massage there tons of stuff

You want to keep it over to IRS Publication 502?

To look at what medical expenses might get thrown into this bucket

Now the math is you're gonna add up all those expenses and the expenses over and above

Seven and a half percent of your adjusted gross income go into the equation

So for example, if you make a hundred thousand dollars adjusted gross income

You've minus seven point five percent. So seventy five hundred and anything above that would be a deductible medical expense

So if you had eight thousand dollars in medical expenses, you could deduct five hundred dollars of medical expenses

I know it's kind of crappy

I'm not a big fan for my business owner videos, you know, I love the HSA and the HRA watch those videos

But that's the medical expense

You want to add that up anything over seven and a half percent of your AGI?

Number two home mortgage interest. Now this one got a little more complicated as well

And I've got a separate YouTube video on home mortgage interest

But here's the general rule you get to deduct the interest as an itemized deduction on your primary

resident mortgage only and in fact, its

Acquisition indebtedness. You cannot write off the HELOC interest. You can't write off interest the second home or the RV or the boat

It's only interest on your primary home

Acquisition and deadness. So if you got a HELOC to remodel the kitchen doesn't matter it's only the interest on the acquisition indebtedness

so it's kind of crappy and it's limited to

Seven hundred and fifty thousand dollars of mortgages. So or one mortgage, I know it gets crazy. So not everybody out there has a

$750,000 mortgage so it's not gonna affect you properly and that's okay

But add up that interest and that goes into the equation as well for your total itemized deductions

Number three is charity now we all give something to charity once in awhile and you may take some clothes down to Goodwill or Salvation

Army get a receipt. The first five hundred dollars are easy schmoozing

Those are great great little write off if you give away more in tithes to your church

Or you write a big check to the United Way

Or you actually give donated property maybe a car to NPR's like that

then you need a receipt and there's more forms involved, but you want to add up all your

Charitable contributions and that goes into the bucket of itemized deductions now under the tax custom Jobs Act

This was also changed. It was actually increased so you could give up to 60% of your AGI

So if you're a huge donor one year for some reason you actually can give more to charity and add it into your itemized deduction

Bucket now number four used to be this casualty and theft loss thing

Which got gutted under the tax cuts and Jobs Act. Now remember where the government giveth the government taketh away

So while they made a bigger standard deduction, they hammered these itemized deductions in a lot of ways

So this casualty theft loss thing was basically if a tornado hit your house and anything the insurance didn't cover

you were able to take a ride out for that or if someone broke into your home and

Cause some damage or a tree fell on your house from next door, whatever that went into this bucket

Well, that deduction is now gone. The only deduction you can take is if the federal government

declares the disaster a national federal disaster area

Then you can qualify for the loss that may occur over and above your insurance

So talk to your accountant if that's the case now

The last one I want to talk about number five is salt the state and local tax

Did this is a big one that got again gutted under the tax cuts and Jobs Act. It's affecting a lot of people

Basically, you were able to deduct all of your state and local taxes, maybe your property taxes or the taxes

You paid your state which was great. Well now it's limited in total to a maximum amount of ten thousand dollars

so if you were in

California or New York or Illinois and had fifty thousand dollars in state tax not to mention your property taxes

It's limited to ten thousand dollars. Ouch

so this is where there's a little readjustment of the middle-income tax bracket and those that are

Maybe making more money might pay more in taxes

so you want to be careful with that and make sure you

Realize what you're getting into when you get into this itemized deduction equation

Now those are the big five, but I'm not gonna mention the miscellaneous itemized deduction

Which was greater than two percent of your AGI kind of thing. It's gone entirely which was unreimbursed employee

expenses tax prep fees

Investment expenses no longer write-off under autumn eyes deductions

But what this means again is summary is that you want to look at all your itemized deductions

Add them up work with your accountant or your tax prep software plug it all in and if you're on that borderline it's worth doing

if you know that the itemized the standard deduction is going to be bigger than itemized then obviously go that direction and don't waste your

time

Thanks so much for watching that video and I want to be your source for tax and legal strategies

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