Form 1040 Schedule A (Itemized Deductions): 2018 Tax Year Comprehensive Analysis And Completion Checklist
Year-Specific Context for Tax Year 2018
Schedule A for 2018 marks a watershed transformation in itemized deductions, resulting from the Tax Cuts and Jobs Act enacted in December 2017. The most substantial change involves the complete elimination of miscellaneous itemized deductions for tax years 2018 through 2025, removing deductions for unreimbursed employee business expenses, tax preparation fees, and professional dues that were formerly subject to a 2% floor of adjusted gross income. The Act also implemented a permanent cap on state and local tax deductions, limiting the combined total to $10,000 ($5,000 for married filing separately). In contrast, prior law allowed unlimited deductions for these taxes.
The rules governing the home mortgage interest deduction underwent substantial modification. For mortgages originated after December 15, 2017, taxpayers may deduct interest only on the first $750,000 of indebtedness ($375,000 if married filing separately), down from the previous limit of $1,000,000. Additionally, interest on home equity loans or lines of credit is no longer deductible unless the loan proceeds were explicitly used to buy, build, or substantially improve the taxpayer’s residence. The overall limitation on itemized deductions, commonly known as the Pease limitation, was eliminated for 2018 and remains suspended through 2025.
Casualty and theft loss provisions were substantially narrowed. For tax years 2018 through 2025, individual taxpayers may no longer deduct personal casualty or theft losses unless the loss is attributable to a federally declared disaster. However, qualified disaster losses—including casualties from major disasters declared in 2016, Hurricane Harvey, Tropical Storm Harvey, Hurricanes Irma and Maria, and California wildfires in 2017 and January 2018—have more favorable treatment with a $500 per casualty floor rather than $100 and do not require the 10% of AGI reduction.
The 2018 tax year also increased the adjusted gross income limitation for cash contributions to specific public charities from 50% to 60%. The medical and dental expense floor remained at 7.5% of adjusted gross income for 2018, continuing temporary relief from the prior 10% floor. Standard deduction amounts nearly doubled to $12,000 for single filers, $24,000 for married filing jointly, and $18,000 for head of household, significantly reducing the number of taxpayers who benefit from itemizing.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Medical and Dental Expense Deductions
The medical and dental expense section begins on Schedule A, line 1, where taxpayers report the total of all qualifying medical and dental expenses paid during the tax year. The threshold for deductibility is 7.5% of adjusted gross income. Only medical and dental expenses exceeding this calculated threshold amount are deductible.
Qualifying expenses include insurance premiums for medical and dental care, payments for hospital care, including meals and lodging, clinic costs, laboratory fees, surgical procedures, dental work, vision care, prescription medications, qualified long-term care services, and medical transportation. Taxpayers must reduce reported insurance premiums by any self-employed health insurance deduction claimed. Qualified long-term care insurance contract premiums are deductible only up to maximum amounts based on age: $420 for individuals under 40, $780 for individuals aged 41–50, $1,560 for individuals aged 51–60, $4,160 for individuals aged 61–70, and $5,200 for individuals aged 71 or older.
Medical expenses that cannot be deducted include amounts paid by insurance companies or other sources, cosmetic surgery unless it is medically necessary, nonprescription drugs (except insulin), general health items such as vitamins, health club dues, and life insurance premiums. Reimbursements received in the current year must be deducted from the reported medical expenses.
State and Local Tax Deductions
The state and local taxes section represents one of the most substantially modified sections for 2018. Line 5a requires entry of either state and local income taxes or state and local general sales taxes, but not both. Taxpayers may deduct state and local general sales taxes using either actual expenses or optional sales tax tables provided in the 2018 instructions.
Line 5b requires entry of state and local real estate taxes, including property taxes paid on the taxpayer’s home and any other real property. Line 5c requires entry of state and local personal property taxes, which include taxes on vehicles, boats, and other movable property. Line 5d involves adding lines 5a through 5c to determine the total state and local taxes paid.
However, line 5e applies a critical limitation: the deduction cannot exceed $10,000 ($5,000 if married filing separately). This cap represents one of the most significant changes to itemized deductions in 2018. Taxes that cannot be included encompass foreign real property taxes, federal personal or real property taxes, and any taxes allocable to excluded income.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Home Mortgage Interest and Points
The interest section begins on line 8, which requires entry of home mortgage interest and points. Line 8a involves the entry of home mortgage interest and points reported on Form 1098. The mortgage interest deduction may be limited based on the amount of indebtedness and the purpose for which the loan proceeds are used.
For mortgages originated after December 15, 2017, mortgage interest is deductible only on the first $750,000 of indebtedness for married filing jointly (or $375,000 if married filing separately). For married individuals filing jointly with grandfathered debt incurred on or before December 15, 2017, the combined limit is $1,000,000.
Line 8b permits entry of home mortgage interest not reported on Form 1098, such as interest paid directly to the seller. Line 8c requires entry of points not reported on Form 1098. Points must generally be deducted ratably over the life of the loan; when a loan ends prematurely, remaining points become fully deductible in that year. Line 8d requires entry of mortgage insurance premiums, which were retroactively extended for 2018.
Charitable Contributions
The charitable contributions section begins on line 11, which allows for the entry of charitable contributions made in cash or by check. The 2018 tax year saw an increase in the limitation for cash contributions to specific public charities from 50% to 60% of adjusted gross income. However, contributions of property remain limited to 30% of adjusted gross income for most taxpayers and 20% for certain types of property.
The taxpayer must donate only to qualified organizations, which include churches, religious organizations, nonprofits, nonprofit hospitals and medical research organizations, nonprofit schools, and charitable organizations such as the Salvation Army, American Red Cross, and United Way. Line 12 requires entry of noncash contributions. Form 8283 must be attached if the total deduction for all noncash gifts exceeds $500.
Contributions for which the taxpayer receives a benefit in return are deductible only to the extent the payment exceeds the fair market value of the benefit received. Line 13 permits entry of charitable contribution carryovers from prior years. Excess charitable contributions exceeding the annual percentage-of-AGI limitation can be carried forward and deducted in the five succeeding years.
Casualty and Theft Losses from Federally Declared Disasters
Line 15 addresses casualty and theft losses from federally declared disasters. Beginning in 2018, personal casualty and theft losses of property not connected with a trade or business are deductible only if the loss is attributable to a federally declared disaster. This represents a fundamental narrowing of the casualty loss deduction.
Qualified disaster losses represent an important exception. These include individual casualty or theft losses of personal-use property attributable to major disasters declared in 2016, such as Hurricane Harvey, Tropical Storm Harvey, Hurricanes Irma and Maria, or the California wildfires in 2017 and January 2018. Qualified disaster losses do not require the standard 10% of adjusted gross income reduction and carry a $500 per casualty floor rather than $100.
For casualty losses from federally declared disasters that do not qualify as qualified disaster losses, the standard $100 per casualty and 10% of adjusted gross income limitations apply. Form 4684 must be completed and attached to Schedule A. Casualty and theft losses covered by insurance cannot be deducted unless the taxpayer files a timely claim for reimbursement.
Ten-Step Completion Checklist for Schedule A, Tax Year 2018
Step 1: Confirm Itemization Is Beneficial.
Calculate total estimated itemized deductions and compare against the 2018 standard deduction: $12,000 if single or married filing separately, $24,000 if married filing jointly or qualifying widow(er), or $18,000 if head of household. Itemize only if your total itemized deductions exceed the applicable standard deduction amount.
Step 2: Gather Medical and Dental Expense Documentation.
Collect records of all qualifying medical and dental expenses paid during 2018, including insurance premium statements, receipts for hospital care, prescription records, and documentation of transportation to medical care. Calculate the 7.5% of adjusted gross income threshold; only expenses exceeding this amount are deductible.
Step 3: Calculate and Document State and Local Tax Deduction.
Gather documentation of state and local income taxes withheld from wages and estimated tax payments made during 2018. If electing the sales tax deduction, either calculate actual sales taxes paid or use the 2018 Optional Sales Tax Tables. Gather documentation of real estate property taxes and personal property taxes paid. Calculate the total and ensure it does not exceed the $10,000 cap ($5,000 if married filing separately).
Step 4: Verify and Document Mortgage Interest and Points.
Obtain Form 1098 from your mortgage lender. Verify the amount shown matches your records. If you refinanced or took out a new mortgage in 2018, determine whether the debt was originated before or after December 15, 2017. If points were paid and not fully shown on Form 1098, choose the deductible amount. Gather documentation of mortgage insurance premiums paid.
Step 5: Compile Charitable Contribution Documentation.
For all cash or check contributions of $250 or more, obtain written acknowledgment from the donee organization. For noncash donations not exceeding $5,000 each, maintain detailed records. For noncash contributions exceeding $5,000 per item, obtain a qualified appraisal. Prepare Form 8283 if total noncash contributions exceed $500.
Step 6: Obtain and Complete Casualty or Theft Loss Documentation.
If you suffered a casualty or theft loss in 2018 attributable to a federally declared disaster, obtain Form 4684. Determine whether the loss qualifies as a qualified disaster loss—complete Form 4684 Section A for personal-use property. Attach Form 4684 to Schedule A. Personal casualty losses not attributable to a federally declared disaster are not deductible for 2018.
Step 7: Calculate Investment Interest Deduction (If Applicable).
If you claim investment interest expense on line 9, prepare Form 4952. This form calculates the limitation on investment interest expense, which is limited to net investment income. Attach Form 4952 to Schedule A if investment interest is claimed.
Step 8: Complete Schedule A Line by Line.
Enter total medical and dental expenses on line 1 and adjusted gross income on line 2. Multiply line 2 by 0.075 on line 3, then subtract line 3 from line 1 on line 4. Enter total state and local taxes (capped at $10,000 or $5,000 if married filing separately) on line 5e. Enter home mortgage interest and points on line 8e and investment interest on line 9. Enter charitable contributions on lines 11–14. Enter casualty losses on line 15. Note that miscellaneous itemized deductions are not deductible for 2018. Add lines 4 through 16 and enter the total on line 17.
Step 9: Transfer Total Itemized Deductions to Form 1040.
Transfer the total from Schedule A, line 17, to Form 1040, line 8. Compare the total itemized deductions to the standard deduction amount for your filing status. If itemized deductions exceed the standard deduction, attach Schedule A to Form 1040. If the standard deduction exceeds itemized deductions, claim the standard deduction and do not file Schedule A.
Step 10: Assemble, Sign, and File.
Ensure Schedule A is fully completed with your name and Social Security number at the top. Ensure all required forms (Form 4684 for casualty losses, Form 8283 for noncash gifts exceeding $500, Form 4952 for investment interest) are completed and attached. Sign and date Form 1040 and Schedule A. File the complete return according to IRS instructions. Retain a copy of all forms and supporting documentation for your records.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Material Changes to Schedule A in 2018
The 2018 tax year brought fundamental restructuring to Schedule A through the Tax Cuts and Jobs Act. Miscellaneous itemized deductions were eliminated beginning in 2018. Before 2018, taxpayers could deduct unreimbursed employee business expenses, investment advisory fees, tax preparation fees, and other miscellaneous expenses subject to a 2% AGI floor. Beginning in 2018, all such miscellaneous itemized deductions are no longer deductible.
The state and local tax deduction underwent fundamental restructuring with the imposition of a $10,000 cap ($5,000 for married filing separately). Before 2018, taxpayers faced no overall cap on their deductions. Home mortgage interest deductions were subject to new loan-origination-date-based limitations. For loans originated after December 15, 2017, the deductible mortgage interest applies only to the first $750,000 of indebtedness ($375,000 if married filing separately), down from the previous $1,000,000 limit.
The overall Pease limitation on itemized deductions was eliminated for 2018. Before 2018, high-income taxpayers were required to reduce total itemized deductions by 3% of AGI above specified thresholds. Casualty and theft loss deductions underwent substantial narrowing. Beginning in 2018, personal casualty losses are only deductible if attributable to a federally declared disaster. Charitable contribution limitations were modified, with the limitation for cash contributions to specific public charities increasing from 50% to 60% of adjusted gross income.
The combined effect of nearly doubling the standard deduction amounts and eliminating and restricting numerous deduction categories significantly reduced the number of taxpayers who itemize. In 2017, 31 percent of individual income tax returns had itemized deductions, compared with 9 percent in 2020, reflecting TCJA’s substantial impact on taxpayer filing decisions.
For professional assistance with your 2018 Schedule A itemized deductions or any tax filing questions, contact our tax experts at (888) 260-9441.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
