One of the biggest changes in the recent tax overhaul for most everyday taxpayers was the large increase in the standard deduction. Think of the standard deduction as a big deduction which you don’t have to prove. If you want to take the standard deduction: you can take the deduction. It’s one of the very few deductions you take on your taxes that you’ll be asked to prove. And last year, that deduction…almost doubled.
The was great news for many people. Married couples can now deduct up to $24,000 - and never have to save a receipt.
Not so fast. If you live in a state with a small standard deduction (like Hawaii) you still want to keep up with things like medical and mortgage numbers. Because even if you can’t come up with more than $24,000 in deductions for your federal return - you probably will be able to come up with more than the $4,400 in deductions you will need to benefit you on your Hawaii return.
For most taxpayers - the large increase in the standard deduction was a real win. But it doesn’t mean (if you live in Hawaii) that you can forget about itemized deduction tracking. Many deductions that are limited or eliminated for federal purposes are still valuable for state purposes.
Tax “reform” usually is just a reshuffling and any notion that reform means simplification is usually…proven to not be the case. Tax questions? Stop by for a half hour or so if your looking for a cpa in Maui and let me interview for your business. There is no charge for an initial meeting.