How many americans itemize their taxes

The new tax law does preserve the medical-expense tax deduction — supported by AARP. The law allows Americans to write off medical expenses that exceed 7. Still, the higher standard deductions also may result in fewer filers being able to take the medical-expense deduction, Bronnenkant says. Other popular deductions — such as interest on home equity loans, unreimbursed employee expenses and moving costs — are no longer allowed.

And starting in , alimony will no longer be deductible for those paying it to a divorced spouse. Tax professionals suggest some filers still might be able to itemize by maximizing potential tax breaks, such as charitable donations. You are leaving AARP. Please return to AARP. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age.

You can also manage your communication preferences by updating your account at anytime. Itemized deductions were created as a social-engineering tool by the government to provide economic incentives for taxpayers to do certain things, such as buy houses and make donations to charities.

Schedule A is broken down into several different sections that deal with each type of itemized deduction. The following is a brief overview of the scope and limits of each category of itemized deduction. This deduction is perhaps the most difficult—and financially painful for which one can qualify. However, the 7. Long-term care premiums are calculated slightly differently than medical expenses are.

There is a deduction limit based on your age, and the insurance must be "qualified. Homeowners can deduct the interest they pay on their mortgages and some home-equity debt. If the mortgage was originated before Dec. The higher limit still applies if you refinance that older mortgage, as long as the loan amount stays the same.

Taxpayers who itemize are able to deduct two types of taxes paid on their Schedule A. Personal property taxes, which include real estate taxes, are deductible along with state and local taxes that were assessed for the previous year. However, any refund received by the taxpayer from the state in the previous year must be counted as income if the taxpayer itemized deductions in the previous year.

In addition, foreign real estate taxes not related to a trade or business are not tax deductible. Any donation made to a qualified charity is deductible within certain limitations. Excess amounts must be carried over to the next year. These include cash contributions and donations of food, and they apply both to individuals and corporations.

Any casualty or theft loss incurred as a result of a federally declared disaster can be reported on Schedule A. If a taxpayer incurs a casualty loss in one year and deducts it on their taxes, any reimbursement that is received in later years must be counted as income.

Taxpayers must complete Form and report the loss on Schedule A. Now, you must fall into one of four categories to be able to claim job-related expenses. You must be either an armed forces reservist, a qualified performing artist, a state or local government official working on a fee basis, or an employee with impairment-related work expenses.

Workers who fall into these categories and claim expenses must complete Form This final category of itemized deductions includes items such as gambling losses to the extent of gambling winnings, losses from partnerships or subchapter S corporations, estate taxes on income in respect of a decedent IRD , and certain other expenses. Some of these deductions are eliminated or changed from to For the tax year and onward, check with your tax advisor.

Although these cuts will also affect how much corporate tax is applied to the deficit, they do not expire starting in as the individual cuts do. Tax-bill proponents point out that Americans who own stocks, mutual funds, or exchange-traded funds ETFs in their retirement and investment accounts will also profit from these changes.

The reason: Their investments rise in value when multinational stocks rise in value. They also note that the prior system of worldwide taxation harms Americans by sending jobs, profits, and tax revenue overseas by effectively double-taxing foreign-earned income.

Most developed countries use a territorial system, and the United States joined them beginning Jan. This could result in fewer companies relocating overseas to lower their taxes.

Corporations, like individuals and estates, pay taxes under a bracketed system with increasing marginal rates. According to an analysis by The Wall Street Journal, the types of companies most likely to benefit from the lower corporate rates are retailers, health insurers, telecommunications carriers, independent refiners, and grocers. As with the changes in how foreign profits are taxed, the changes in how corporate profits are taxed will affect everyone who owns shares of a corporation through stocks, mutual funds, or ETFs.

The top marginal tax rate for U. They say GDP will grow by an average of 0. Starting already, tax preparers, tax attorneys, and accountants can expect a boost in business from clients seeking to maximize benefits or limit damage from the tax-code changes. Tax preparers who primarily work for low- and middle-class taxpayers may see a drop in business, however, since fewer of those households will benefit from itemizing their deductions.

Most changes expire after ; a few, like the reduced medical-expense threshold, expire sooner. The corporate tax rate cut, international tax rules, and the change to a slower measure of inflation for determining tax brackets are permanent.

The House released its first version of the tax bill on Nov. Different groups who stood to gain or lose significantly fought hard to protect their interests. Graduate students felt threatened by the possibility that their tuition waivers would be taxed. Students were opposed to getting tax bills for the income they never received. Anyone with student-loan debt will still be able to deduct the interest, even if they no longer itemize because of the higher standard deduction.

They didn't. They can take this deduction whether they itemize deductions or take the standard one. The low-income housing tax credit was also saved. The act also failed to eliminate the individual alternative minimum tax. But it did increase the threshold for paying the AMT so fewer taxpayers will be affected by it.

The House bill wanted to eliminate medical-expense deductions, but the final bill keeps them and provides a small boost for two years, as noted above in "You Itemize Deductions and File Schedule A. The earned income tax credit , which gives a tax break to the working poor, was not expanded.

And, in the end, the expansion of plans to cover K education did not include homeschooling. The Tax Cuts and Jobs Act will have an effect on tax payments for all Americans from the tax year and primarily lasting through Individually, understanding how the Act affects taxes in your tax bracket and individual circumstances that affect you directly can help you to ensure you are taking advantage of all the deductions you deserve and ultimately paying the lowest tax bill available to you.

Library of Congress. Internal Revenue Service. Accessed Mar. Homes Eligible. National Association of Realtors. USA Today. United States Congress. Tax Foundation. Journal of Accountancy.

Centers for Medicare and Medicaid. Tax Policy Center. United Staes Congress. Accessed March 13, American Association for the Advancement of Science. National Center for Education Statistics. Income Tax. Tax Laws. Itemizing requires you to keep receipts throughout the year. You also need to keep those receipts after you file just in case of an audit. For most people, there is a balance between the work required to itemize and the amount you save by itemizing.

Generally speaking, itemizing is a good idea if the value of your itemized expenses is more than the value of the standard deduction. Because the new tax plan nearly doubled the standard deduction for the tax year when compared with before it went into effect, some people who itemized their taxes will not benefit from itemizing their taxes. Even if itemizing would save you more than the standard deduction, consider the amount of time and energy that also goes with itemizing.