March 23, 2018 1:48 am

2018 Returns: What Deductions Can You Take Without Itemizing

The Tax Cuts and Jobs Act of 2017 made a number of significant changes to various write-offs that can be claimed without itemizing. Most of the changes in deductions from gross income affect 2018 returns (and in many cases, they continue to apply to returns through 2025). Here is a rundown of what’s new and what’s unchanged. Take this information into account in determining your withholding and estimated taxes for 2018.

What’s new
Effective starting in 2018, no deduction can be taken for moving expenses. This is so even though the move is work-related. The only exception is for members of the military on active duty who move pursuant to military orders for a permanent change of station; they can deduct their moving expenses.

Another deduction that’s been eliminated is the domestic production activities deduction for certain business activity in the U.S.

Looking ahead, there’s a change in the alimony deduction. Effective for divorce decrees and separation agreements entered into or substantially modified after December 31, 2018 (not after 2017), no deduction for alimony payments is allowed. And the recipient does not report the payments as income. In effect, alimony payments are treated the same as child support payments…not deductible by the payer and not taxable to the payee. This change is set to run only through 2025.

What’s unchanged
While there are some changes to deductions subtracted from gross income, the vast majority remain in place. These deductions include:

  • Educator deduction of up to $250 in 2018
  • Certain business expenses of reservists, performing artists, and fee-based government officials
  • Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs) contribution deduction
  • Deductible part of self-employment tax
  • Self-employed SEP, SIMPLE or other qualified retirement plan deduction
  • Self-employed health insurance deduction
  • Penalty on early withdrawal of savings
  • IRA contribution deduction
  • Student loan interest
  • Jury duty pay turned over to employers
  • Deductible expenses related to the rental of personal property
  • Reforestation expenses
  • Repayment of supplement unemployment benefits
  • Attorney fees and court costs for discrimination claims or claims to recover whistleblower awards from the IRS

Impact of changes
Keep in mind that adjusted gross income (which is what you have after factoring in the deductions from gross income described above) and modified adjusted gross income are key metrics in the tax law. They are used to determine eligibility for a variety of tax deductions and credits. Modified adjusted gross income is generally the same as adjusted gross income with certain other tax breaks added back. Your 2018 modified adjusted gross income will also generally be used to determine whether you will need to pay additional Parts B and D Medicare premiums for 2020.

Other deductions
There are other deductions that you can take in 2018 even though you don’t itemize. These include:

  • Standard deduction (including additional amounts for age and/or blindness). The basic standard deduction amounts for 2018 are substantially higher than for 2017. The 2018 basic standard deduction is $24,000 for joint filers and qualifying widows/widowers, $18,000 for heads of households, and $12,000 for singles and married persons filing separately.
  • New deduction for owners of pass-through businesses. This is a 20% deduction against qualified business income, but there are many limitations that come into play.

Take the time to review what deductions from gross income you can continue to claim. Be sure to include any capital losses in excess of capital gains (including carryovers), which can be used to offset up to $3,000 of ordinary income ($1,500 if you’re married but file separately). Confused? These and other tax changes will be explained in J.K. Lasser’s Your Income Tax 2019.