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Deductions and Write-Offs
The most frequently asked tax questions related to Deductions and Write-Offs
For Tax Payers
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For passenger automobiles placed into service after December 31, 2017 the maximum amount of allowable depreciation is increased to $10,000 for the first year;
$16,000 for the second year; $9,600 for the third year; and $5,760 for the fourth and later years. Each of these amounts will be indexed for inflation in years after 2018.
The maximum first-year bonus depreciation (which was scheduled to reduce to $6,400 in 2018 and $4,800 in 2019) will remain at $8,000.
For property placed into service after December 31, 2017, qualified leasehold improvement, qualified restaurant and qualified retail improvement property will be subject to a 15-year recovery period and straight-line depreciation.
The new rules eliminate the requirement that the original use of the property commence with the taxpayer. As such, bonus depreciation is available for new or used property.
Taxpayers have a right to elect 50% bonus depreciation for property placed into service after September 27, 2017 during the first tax year that ends after September 27, 2017.
In the years that follow the bonus depreciation percentage will diminish. i. For property placed into service after December 31, 2022 and before January 1, 2024 bonus depreciation is 80%.
ii. For property placed into service after December 31, 2023 and before January 1, 2025 bonus depreciation is 60%.
iii. For property placed into service after December 31, 2024 and before January 1, 2026 bonus depreciation is 40%.
iv. For property placed into service after December 31, 2025 and before January 1, 2027 bonus depreciation is 20%.
The rate for medical expense and moving expense for certain military personnel deductions is 18 cents a mile.
For charitable volunteers the mileage rate is unchanged at 14 cents a mile.
Under the new law, for property placed into service in tax years beginning after December 31, 2017, the maximum amount of expensing is increased to $1,000,000, and the phase-out threshold amount is increased to $2,500,000.
For tax years after 2018 these amounts will be indexed for inflation.
$12,000 for Single, Qualifying widower and Married filing separately taxpayers.
$24,000 for married taxpayers filing Joint returns,
$18,000 for taxpayers filing as Head of Household.
The additional standard deduction available to taxpayers who are age 65 or older and or blind remain unchanged.
For 2018 the additional amount is $1,300 for married taxpayers and $1,600 for unmarried taxpayers.
If you are age 40 or younger at the end of 2018; $780 for those age 41 through 50; $1,560 for those age 51 through 60; $4,160 for those age 61 through 70; and $5,200 for those over age 70.
,br> The Act provides that all deductions for expenses incurred in carrying out wagering transactions, and not just gambling losses, are limited to the extent of gambling winnings.
In addition, the AMT preference related to medical expenses is eliminated.