It could be many weeks, or even months, before taxpayers and payroll processors begin to fully understand how the new tax laws will affect matters, but the guidance due to be issued by the IRS this month, should give further insight.
Changes to the way taxes are filed and processed will be put into place in February, and the changes may well affect you minimally; a lot will depend upon your income and your personal tax situation. Whatever your circumstances, be prepared for your taxes to change, even if you won’t yet know how:
Why tax payers should be prepared for tax uncertainty:
It may be hard at first to get an indication of whether your taxes have increased or decreased due to the tax reform, and owning a property, having children and multiple other factors, could affect how much you will owe in taxes at the end of the year. So, be as prepared as you can be for some degree of uncertainty surrounding your taxes for the next financial year, and that way you may not get too much of a shock if you end up having to pay more.
When can I seek help from tax professionals?
You can seek the help and guidance of tax professionals at any stage of the tax process, and at any time of the year, but be aware that until the IRS release their new withholdng tables and extra guidance on the ins and outs of the changes to tax laws, they may not be able to give you definitive answers to your specific queries. This should happen soon though, and you can always contact your local tax professional to see if they can help you now, or if not yet, when they may be able to.
Don’t adjust your W-4 forms just yet:
Changing how much tax is extracted from your pay check on your W-4 form might be something that you are tempted to do, but it’s not advisable to do this until the IRS give definitive instructions, as they may continue to work with the existing forms for some time to come.
Adjusting withholdings was primarily done to enable individuals to come as close to paying the correct taxes as was possible, instead of ending the year by owing money to the IRS or ending up with a huge refund, but this may not be so straightforward for the next tax year. The best advice currently, is to keep everything as it is for the month of January at least, and wait to see what the IRS will issue as guidance.
Most importantly, don’t panic:
While nobody likes changes to laws that are already complex and often longwinded, they may well benefit you, so try not to panic until you can speak to your tax professional, and even if there are some changes that may not go in your favour, others may, so wait until you know more before you have a total tax meltdown!