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Started By
Message
Itemize vs standard deduction
Posted on 2/4/19 at 10:59 am
Posted on 2/4/19 at 10:59 am
We have itemized for 20 years. My travel-for-work expenses run about $20k, mileage is around 65-70,000.
Wife got one years' salary as severance, taxed at an astronomical level.
Mortgage interest is below $10k now. I'm curious if we should just take standard or itemize still.
We haven't spoken to our tax guy yet...just seeking opinions.
Wife got one years' salary as severance, taxed at an astronomical level.
Mortgage interest is below $10k now. I'm curious if we should just take standard or itemize still.
We haven't spoken to our tax guy yet...just seeking opinions.
5
Posted on 2/4/19 at 11:02 am to MrSmith65
Definitely itemize. The new standard deduction is $24,000 and it seems you're going to surpass that.
Posted on 2/4/19 at 12:11 pm to MrSmith65
quote:
My travel-for-work expenses run about $20k, mileage is around 65-70,000.
Are you an employee getting a W-2? if so, this may be a huge problem, as these expenses are no longer deductible as an itemized deduction for employees.
quote:
Wife got one years' salary as severance, taxed at an astronomical level.
She was withheld at a high level. The actual marginal tax rate on that income may be less.
quote:
I'm curious if we should just take standard or itemize still.
Add up all your mortgage interest, charitable donations, state and local property and income taxes (up to 10K) and see where you end up. It's a math decision, at this point, nothing more.
Medical expenses may be an option
Posted on 2/4/19 at 12:17 pm to LSUFanHouston
No medical deductions.
Yes, I’m a W2 earner,
Yes, I’m a W2 earner,
Posted on 2/4/19 at 1:51 pm to MrSmith65
Yea as Houston said, your mileage along with any other business deductions will not be allowable itemized expenses any longer if you’re w2 employee.
You’re gonna be in a boat with me and some others where it’ll be interesting to see how the new tax law benefits us or not.
You’re gonna be in a boat with me and some others where it’ll be interesting to see how the new tax law benefits us or not.
Posted on 2/4/19 at 2:02 pm to MrSmith65
quote:
Wife got one years' salary as severance, taxed at an astronomical level.
The withholding was probably ridiculous because their payroll calculation assumes your wife would be making this amount for every pay period in the year. As others have said the actual tax rate on the money will be similar to your regular income.
Posted on 2/4/19 at 2:02 pm to MrSmith65
quote:
We haven't spoken to our tax guy yet...just seeking opinions.
I hate to be "Mr. Obvious" but normally an A/B analysis is done and whatever generates the best result for the taxpayer is the way to go.
Now, at the end of the day, all that paperwork and recordkeeping may not be worth the (now reduced) benefit of itemization, but obviously I would recommend doing (ETA: on the return, obviously) what generates the lowest underpayment/highest overpayment.
This post was edited on 2/4/19 at 2:39 pm
Posted on 2/4/19 at 2:19 pm to Ace Midnight
quote:
Now, at the end of the day, all that paperwork and recordkeeping may not be worth the (now reduced) benefit of itemization, but obviously I would recommend doing what generates the lowest underpayment/highest overpayment.
Between the higher standard deduction, and the knockout of miscellaneous itemized deductions subject to 2% of AGI, it's going to cause a lot of paperwork and recordkeeping to go away. That's kind of what the politicians wanted when they talked about "tax simplification"
What some people are about to learn is that sometimes, simple comes at a cost.
Posted on 2/4/19 at 3:49 pm to MrSmith65
quote:
I'm curious if we should just take standard or itemize still.
Assuming you're in a state with income taxes, you'll need to consider both options carefully. You'll be required to take the same deduction on your state return that you did on your federal return. The problem here is that your state standard deduction may be significantly less (i.e. significantly further away) than your itemized deductions.
A general rule of thumb is that if your itemized deductions total $19,000 or more, you'll be better off taking the itemized deductions. You're specific circumstances will dictate the tipping point for you.
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