Although the new tax bill might mean that Tax Year 2017 is the last year you need to itemize, there is still plenty of time to take advantage of these often-overlooked tax deductions. For many Americans, itemizing can help lower their tax bill or increase their refund. The savings can go further than you think. For a full list of possible deductions, check out the Interactive Tax Assistant at IRS.gov
1. Retirement Contributions
Contributions made to your traditional IRA may be tax-deductible. Under 50? You can contribute up to $5,500 annually and after 50, that number rises to $6,500. If you or your spouse do not have an employer-based retirement account, or if your income falls below a certain threshold ($62,000 for single filers, $99,000 for couples filing jointly) you can contribute the maximum amount to a traditional IRA. Even better: IRA contributions for 2017 end on April 17, 2018, so to maximize your savings, make sure to deduct your contributions for the entire tax year. You can also deduct the advisory or custodial fees from an IRA account if you pay those fees by check from funds outside your retirement account.
If you paid a financial advisor or attorney, or otherwise spent money to manage money in a non-retirement account, those costs are also deductible.
2. Medical & Dental
For 2017 and 2018, out of pocket medical expenses that exceed 7.5% of adjusted gross income (AGI) can be deducted if you itemize your deductions on Schedule A. On January 1, 2019, the threshold returns to 10% of AGI. The definition of out of pocket medical expenses is quite broad, covering the premiums for your health, dental, Medicare, and long-term care insurance, as well as copays and the fees associated with physical therapy and lab work. Even everyday items like eyeglasses, hearing aids, and breast pumps can be deducted as medical supplies. If you need to travel out of town for a medical procedure, you can also deduct the cost of transportation and lodging during your treatment.
3. State Taxes
Tax filers have the option of deducting either state sales tax or the state income tax. If you live in Connecticut, or another state with a state income tax, you’ll usually save more if you claim the state income tax as a deduction unless you’ve purchased a big-ticket item like a car or boat in the last year. If that’s the case, you’ll want to investigate how much your state charges in sales and income taxes, so you can compare your potential savings before claiming one or the other. Right now, there is no limit on the amount you can claim on these deductions, but this is set to change in Tax Year 2018.
Edited by:
Sara McKinney
 saractag@gmail.com
Sara is a recent graduate of Kalamazoo College and a new addition to the Cowen Team. Her responsibilities include IT support, event planning, and general administrative assistance.
