Tax reform changes likely to reduce number of taxpayers who itemize

The doubling of the standard deduction due to tax law changes is likely to reduce the number of taxpayers who normally itemize.

 

In previous years, about one out of three taxpayers itemized. The IRS expects that number to be less for tax year 2018. The Tax Cuts and Jobs Act (TCJA) passed in December 2017, significantly affects deductions in several ways, impacting those taxpayers who normally itemize.

 

The TCJA doubles the standard deduction amount for all filing statuses. The standard deduction is a dollar amount that reduces the amount of income on which a taxpayer is taxed and varies according to their filing status. Because of this, many qualifying taxpayers may find the increased standard deduction more than their total itemized deductions and opt for choosing the standard deduction rather than itemizing.

 

Taxpayers should check their 2017 itemized deductions to make sure they understand what the tax reform changes could mean for their tax situation in 2018. Those who still plan to itemize will complete an updated version of Schedule A, Itemized Deductions, and attach it to their tax return.

 

Publication 5307, Tax Reform Basics for Individuals and Families, is a key resource to understanding the impact of the tax reform law on deductions. The publication provides information about:

 

increasing the standard deduction,

suspending personal exemptions,

increasing the child tax credit,

adding a new credit for other dependents, and

limiting or discontinuing certain deductions.

 

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