As the 2018 tax season fades, we wanted to provide a quick recap of  some of the more notable items we saw while preparing returns this season.

Jul 2019
Julianna Donovan

The most significant observation was that many clients were better off electing to take the standard deduction rather than itemizing their deductions, as had been the norm in years past.

Under the Tax Cut and Jobs Act (TCJA), the standard deduction almost doubled from 2017 and many itemized deductions were limited or completely repealed. Most notably, the deduction for state and local taxes is capped at $10,000 and all but done away with are miscellaneous itemized deductions.

An additional fallout from the change to the standard deduction is that gifts to charity did not provide the same tax benefit as in previous years. For 2019 planning purposes, you may consider giving to charity through your IRA Required Minimum Distribution. Alternatively, you could consider batching several years’ worth of charitable gifts into a single calendar year (e.g. via a donor advised fund which allows clients to donate several years’ worth of contributions in one year) so that you may be in a position to itemize your deductions in a given year and then revert back to the higher standard deduction.

For those who itemize their deductions, we are often asked whether or not to send in charitable donation acknowledgment letters and/or receipts for out-of-pocket medical expenses.

The short answer is ‘no’, but we do need a summary of donations and medical expenses; it is ideal if medical
expenses are separated into major categories such as drugs/prescriptions, copays, hospital, etc. Remember to include medical expenses related to nursing home or assisted living costs. One important note to keep in mind for 2019 tax planning purposes is that the threshold for deducting medical expenses has increased from 7.5% to 10% of your adjusted gross income. As an example, if you have $100,000 of income you may only deduct medical expenses to the extent that they exceed $10,000 – assuming once again that the total of your itemized deductions exceeds the standard deduction!

Lastly, but most importantly, with the tax season compressed into a few short weeks we are always happy to receive tax information in the most efficient manner possible.

In many cases, email is an efficient means by which to communicate and send us your tax information, but it is often the least secure. If you have emailed unsecured tax documents we implore you to delete these items from your Sent Items folder. Going forward, we strongly encourage you to upload tax material containing sensitive information (or any documents for that matter) to the client portal. A link to the client portal may be found on our website and any of our Portfolio Administrators would be pleased to help you navigate this process.

We have only touched upon the tip of the tax iceberg but we hope this helps serve as a guide as well as helpful reminder as we move through 2019 and prepare for the next tax season.

As always, we are happy to answer any questions or assist you in the time-consuming process of preparing your tax returns. Joe Flynn in our Tax group is fond of quoting the French Marshall Lyautey, who once asked his gardener to plant a tree. The gardener objected that the tree was slow growing and would not reach maturity for 100 years. The Marshall replied, ‘In that case, there is no time to lose; plant it this afternoon!’

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