What Itemized Deductions Are Allowed in 2024?
Understanding the various itemized deductions available to taxpayers can significantly impact their overall tax liability. As the tax year 2024 approaches, it is crucial for individuals and businesses to be aware of the deductions they can claim to potentially reduce their taxable income. This article outlines the key itemized deductions that are expected to be allowed in 2024.
1. State and Local Taxes (SALT)
One of the most significant itemized deductions is the deduction for state and local taxes (SALT). Taxpayers can deduct either state and local income taxes or sales taxes, whichever is greater. However, there is a cap on the total amount of SALT deductions that can be claimed. For tax year 2024, the deduction for SALT is subject to a combined total limit of $10,000 ($5,000 for married taxpayers filing separately).
2. Property Taxes
Property taxes paid on real estate owned by the taxpayer can also be deducted. This deduction is available to individuals and businesses alike. However, it is important to note that only the taxes paid on real estate owned for personal use or investment purposes are deductible.
3. Mortgage Interest
For taxpayers who itemize deductions, the interest paid on a mortgage for a primary or secondary home can be deductible. The deduction is available for the first $750,000 of mortgage debt ($375,000 for married taxpayers filing separately) for mortgages taken out after December 15, 2017. However, the deduction is still available for existing mortgages that were taken out before that date, with no limit on the amount of debt eligible for the deduction.
4. Medical Expenses
Medical expenses that exceed 7.5% of the taxpayer’s adjusted gross income (AGI) can be deducted. This includes unreimbursed medical expenses for the taxpayer, their spouse, and dependents. Examples of eligible medical expenses include doctor visits, prescription medications, hospital stays, and insurance premiums.
5. Charitable Contributions
Donations to qualified charitable organizations are deductible as itemized deductions. Taxpayers can deduct the fair market value of cash contributions, as well as the fair market value of property donations. However, certain restrictions apply, such as the requirement that the donation be made to a qualified organization and that the property has been owned for more than one year.
6. Casualty Losses
Casualty losses due to federally declared disasters can be deducted as itemized deductions. The loss must be greater than 10% of the taxpayer’s AGI to be deductible. However, it is important to note that the deduction is subject to a $100 per casualty event threshold.
7. Job Expenses
Self-employed individuals can deduct certain job-related expenses that are not reimbursed by their employer. These expenses include office supplies, home office expenses, travel expenses, and unreimbursed employee business expenses.
In conclusion, tax year 2024 offers a range of itemized deductions that can help taxpayers reduce their taxable income. It is essential to understand the eligibility requirements for each deduction and to keep detailed records to support any claimed deductions. Consulting with a tax professional can provide further guidance on maximizing your tax savings through itemized deductions.
