DEDUCTIONS FOR TAXES PAID
Beginning in the tax year 2018, strict limitations have been put upon the deduction of real estate and state personal income taxes paid during the year. This affects your withholding taxes and/or estimated taxes paid along with any state income tax you may have paid with prior year tax returns.
This year, one must add together the total of real estate and state personal income taxes and one can only deduct a total of $10,000. Any amounts paid over this total either for real estate or income tax to your state will go undeducted. This is extremely painful for those whose real estate tax almost comes up to this total by itself. Folks that live either on the east coast or west coast live primarily in areas with extremely high real estate taxes. Add substantial earnings to this and its relative high state income taxes, many people will be at a loss for the ability to itemize over the standard deductions. This year the standard deduction is 12,400 for single taxpayers and 24,800 for those who file jointly. If you are over age 65 you are entitled to an additional standard deduction of 1300/ taxpayer. If you don’t itemize for Federal you will not be able to itemize on your State return.
Be sure to be aware of this new rule!