Tax reform changes likely to reduce number of taxpayers who itemize on their federal returns, but Alabama residents will still itemize on their state returns to save hundreds or thousands of dollars!
The Internal Revenue Service today advised taxpayers that the doubling of the standard deduction due to tax law changes is likely to reduce the number of taxpayers who normally itemize. In previous years, about one out of three taxpayers itemized. The IRS expects that number to be less for tax year 2018. The Tax Cuts and Jobs Act (TCJA) passed in December 2017, significantly affects deductions in several ways, impacting those taxpayers who normally itemize.
The TCJA doubles the standard deduction amount for all filing statuses. The standard deduction is a dollar amount that reduces the amount of income on which a taxpayer is taxed and varies according to their filing status. Because of this, many qualifying taxpayers may find the increased standard deduction more than their total itemized deductions and opt for choosing the standard deduction rather than itemizing.
Gregory J. Cook, EA, CPA of Cook & Co. Tax Advisors in Arab, Alabama states that although many taxpayers may elect to take the Standard Deduction on their federal return, most will still need to itemize deductions on their Alabama return.
The IRS reminds taxpayers that the best way to file an accurate tax return is to seek the help of a tax professional who will prepare and e-file their tax return. The IRS offers tips for choosing a tax professional.
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