2019 Tax Guide
46 MONEY.COM MARCH^2019
Yo u
Itemize
WHAT CHANGED?Among those due for big changes are middle-
and upper-middle-class earners who are used
to claiming deductions for their property taxes
and other expenses. This year, roughly 18 million
taxpayers are expected to itemize, down from
46 million last year, according to the Joint
Committee on Taxation.
A key reason for this, of course, is the new,
more generous standard deduction. But it’s not
all good news. The new law also curtails a
number of individual deductions, making them
potentially less valuable. One of the biggest—and
most politically controversial—changes is a new
$10,000 cap on the previously unlimited amount
taxpayers could deduct in state and local taxes.
Residents of high-tax states including
California, New York, and Maryland will be
hardest hit.Wealthy homeown-
ers will also lose a
tax break. Under the
new rules, taxpayers
will be allowed to de-
duct interest paid on
mortgages of up to
$750,000, which is
down from the previ-
ous cap of $1 million.
Much like the cap on
state and local taxes,
that’s likely to most
hurt residents in
urban and coastal
areas, where real
estate values are
the highest.
But be aware: The
new cap applies only
to mortgages taken
out after Dec. 14,- So if you bought
before then, the old,
higher cap remains
in effect.
DO A DRY RUNThat millions of
Americans no longer
need to itemize, atleast until the law be-
gins to phase out in
2026, is a big plus.
But it comes with a
caveat. There’s no
way to know for sure
whether it still makes
sense for you to item-
ize without tallying up
the deductions you
could potentially
claim and comparing
the result with taking
the standard
deduction.
In other words, you
still have to do most
of the work, accord-
ing to Cindy Hocken-
berry, director of tax
research at the Na-
tional Association of
Ta x Pr ofe s s i o n a l s.
Otherwise “you could
be leaving money on
the table and short-
changing yourself,”
she says. “No one
wants that.”WHO PAYS
MORE?While the new rules
should mean a tax cut
for most Americans,
residents of high-tax
coastal states with
hefty mortgages
are among the minor-
ity who could fall
through the cracks.
Roughly 9.4% of tax-
payers in Maryland
will end up owing an
average of $1,490
more than under the
old rules, while 8.6%
of Californians will
pay an average
$2,510 more for
2018, according to
the Tax Policy Center.