Indeed, reducing her adjusted gross income (AGI) by $25,000 may create greater tax savings than a $25,000 itemized deduction
, due to various tax code provisions.
For federal purposes, your total itemized deduction
for state and local taxes is limited to a combined amount not to exceed $10,000 ($5,000 if married filing separate).
The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, limited the itemized deduction
for state and local taxes to $5,000 for a married person filing a separate return and $10,000 for all other tax filers.
By releasing the first installment amounts now, Pappas is giving property owners who paid early last year the opportunity to create an itemized deduction
they otherwise might not have.
It would cap the itemized deduction
at $22,500, but it would protect the exemption for charitable donations.
Taxpayers in the higher marginal tax brackets receive the biggest benefit of using itemized deductions
. The lower the tax bracket, the less likely taxpayers will benefit from electing the lower itemized deduction
165(c)(3), an itemized deduction
is allowed for a theft loss, but under Sec.
Nor is it subject to the section 67 itemized deduction
threshold of 2% of AGI or the section 68 AGI phaseout of itemized deductions
(ii) An itemized deduction
for state and local income taxes, plus a separate itemized deduction
for qualified motor vehicle taxes (above and [paragraph] K-4518 et seq.), or
The following examples and discussion will demonstrate various favorable combinations and consider the effect of the itemized deduction
and personal/dependency phaseouts.
* The itemized deduction
phaseout, for higher income level taxpayers, has been eliminated.
This elimination was confirmed in Notice 2018-61, in which the Department of Treasury and IRS opined that, unlike IRC 67(e)(1) deductions, the section 642(h)(2) excess deduction is treated as a miscellaneous itemized deduction
to the beneficiary and the disallowance of miscellaneous itemized deductions
under new IRC 67(g) "appears to include the section 642(h)(2) excess deduction."