Tax season is fast approaching. The IRS has announced that they will begin processing returns on January 28, 2019 for the 2019 tax season.
As you prepare to file early in 2019 for the 2018 tax year, it’s important to keep the latest tax changes in mind.
Also, it’s important to note that despite the current government shutdown the IRS will process tax returns.
One of the most obvious changes will be to the form you file. The 2018 Form 1040 has been reworked to account for more situations, and will replace the 1040A and 1040EZ forms that many taxpayers used.
You may also notice that you’re receiving a smaller-than-expected refund, or that you have to pay in when you haven’t in the past. This is due to the Tax Cuts and Jobs Act, which went into effect in 2018. This act was designed to give workers more take-home pay by reducing the amount of tax withholding taken out of each paycheck.
However, several tax rates were also reduced, which for some filers may counteract the withholding change.
For any filers taking the standard deduction, the amount increased. Now, single filers can take a $12,000 deduction; heads of household, $18,000; and married couples filing jointly, $24,000. These are significant increases from the 2017 tax year, in which the deductions were $6,500, $9,550 and $13,000, respectively.
The child tax credit has also increased. Filers may now get a credit of $2,000 per qualifying child, as well as a new credit of $500 for other qualifying dependents. The qualifying-child amount is double the 2017 credit.
Personal exemptions, however, have been eliminated in the 2018 tax year, and there are several changes to itemized deductions, such as mortgage interest.
This is by no means a complete list; filers are always encouraged to visit the IRS tax reform news website for the most complete information.
What to do for next year
It’s also important that you make sure you’re in the best shape now for the 2019 tax year.
For those working a standard job (one that issues W-2s at the end of the year), one key place to start is by using the IRS withholding calculator.
This calculator can help you determine how many exemptions to claim on the W-4 withholding form you provide to your employer. Having the right number will ensure that you aren’t paying in at filing time!
You should be sure to take this step around the beginning of each year.
Tax season is upon us. Call or email now to secure your appointment.