December 17, 2018
With 2018 fast coming to an end, it’s time to ask yourself if you’re ready for the new tax season? 2019 brings in a variety of changes and each of these could go on to affect how you file and Form 1040.
Be sure to check your withholding:
Thanks to the TCJA, or Tax Cuts and Jobs Act, each taxpayer may receive a smaller refund or tax bill due to their decreased withholding. If you have a dual income household, work more than one job or for only part of the year, have dependents that claim Child Tax Credits or other dependents, receive high tax refunds or tax bills for the previous year or are a high-income taxpayer in general, then you would be strongly advised to check your withholding.
Take note that the standard deduction increases:
The TCJA doubles all filing status’s standard deduction, and in order to itemize your deductions, you will need to exceed the standard deduction, which in many cases, may be tricky. For more detailed information on standard deductions, please consult with a qualified and experienced tax professional as soon as possible.
Find your tax bracket:
In comparison to the previous year, the federal income tax brackets are now 10%, 12%, 22%, 24%, 32%, 35% and 37% rather than 10%, 15%, 25%, 28%, 33%, 35% and 39% for 2017.
Itemized deductions have been limited or gotten rid of altogether:
If you’re a taxpayer who itemizes their return each tax year, then you may be faced with myriad
Changes, a few of which are mentioned below:
- Unreimbursed medical expenses must exceed 7.5% of your AGI for deduction (this increases to 10% for the tax year 2019
- Alimony payments are no longer deductible
- 60% limitation of AGI for charitable contributions deductions
- You can deduct interest on your mortgage or home equity loan that takes place before Dec 15th 2017 for up to $1,000,000 or $500,000 if you are married filing separate.
- Moving expenses have been eliminated except for members of the US Armed Forces
Changes to dependent benefits:
Personal exemption for your dependents, as well as for yourself and your spouse, have been gotten rid of by the TCJA, however, CTC’s (Child Tax Credit) maximum credit has increased to $2,000 and $1,400 of it can be refundable per qualifying child as the Additional Child Tax Credit or ACTC.
Tax reform is an unavoidable reality, and no matter how much we love or loathe the changes, we cannot escape them, no matter how hard we try! If you’re worried or uncertain about what tax reform means for you as we enter 2019, it’s best to get your information and guidance directly from a tax expert, and please do so before it’s too late and tax time is upon us again.