California chose to not conform to the changes implemented at the Federal Level with the tax changes of 2017 effective in 2018. Your investment advisory fees as well as all previously acceptable California itemized deductions are still allowable for California Income Tax.
California Itemized Deductions
California Law (R&TC section 17076)
California conforms, under the PITL, to the federal rules relating to miscellaneous itemized
deductions under IRC section 67, as of the specified date of January 1, 2015,246 with
modifications, but does not conform to the federal suspension of all miscellaneous itemized
California supports most of the (pre-2018) IRS-approved itemized deductions you can claim on your Federal income tax, but with some California-specific limitations. Before you attempt to claim any itemized deductions you must verify that it is allowed on your California tax return, even if you were able to claim it on your Federal return.
A variety of expenses can be itemized as deductions on your California tax return. Here's a list of some of the most popular itemized deductions.
- IRA Contribution Deduction - You can deduct a limited contribution to your qualifying Individual Retirement Account every year. The deduction limits for 2012 are $5,000 per year for individuals under 50, and $6,000 per year for individuals 50 or over.
- Business Deductions - Qualifying business expenses, business losses, and losses due to theft or depreciation may be itemized and deducted.
- Self-Employment Deductions - If you pay both the employee and the employer's half of the payroll tax, you may deduct the employer's half from your gross income. This deduction generally applies to individuals who are self-employed or small business owners.
- Mortgage Interest Deduction - If you have a mortgage on a first or second home, you may deduct mortgage interest paid as defined in 26 U.S.C. § 163(h).
- Medical Deductions - You can deduct up to 7.5% of your out-of-pocket medical and dental expenses. Self employed individuals may also deduct premiums for qualifying health insurance plans.
- Education and Tuition Deduction - If you paid tuition to an accredited college or university, you can deduct some or all of the tuition and fees you paid. You cannot deduct housing, food, or other secondary expenses, but you may deduct interest accrued on student loans.
- Charitable Donations - Donations to qualifying charities or nonprofit organizations are 100% tax deductible, up to 50% of your gross income.
- Property Tax Deduction - Many states allow you to deduct any property tax paid to a county or municipality from your gross income.
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