Tax Changes Will Affect Your 2018 Tax Return
This is the first year the effects of the Tax Cuts and Jobs Act of 2017 will be seen when filing tax returns. For those who do their own taxes, the first change you may notice is on the 1040 form. The 1040 form used to be just two pages, but now there are an additional six pages of subschedules that you may have to fill out.
The 2017 Act had some hoping for a larger refund, but that won't be the case for most people. "2018 has lower tax rates, but essentially that doesn't necessarily translate to a bigger refund," David Pianta, Certified Public Accountant for Appletree & Kern, said. He explained, "Throughout the year of 2018 you received a higher take home check and realized the tax savings throughout the year. That means if not much changed for you financially, your refund for 2018 should be similar to 2017.
However, that's only if the deductions and credits you usually claim haven't changed as well. There is no longer a personal exemption deduction and the standard deduction has changed. Many people used to itemize their deductions, but the standard deduction has nearly doubled. Also, state and local taxes for income and real estate are now limited to a total of $10,000.
There have been some changes that increase what you can get back. If you have dependent children under the age of 17, the child tax credit increased from $1,000 to $2,000 per dependent. Plus, if you have dependents older than 17, such as college-age children or parents living with you, you can get an additional $500 per dependent.
There is also a new tax deduction for business owners. Anyone classified as a sole proprietor, S-Corporation owner, or partner can claim the 20% Qualified Business Income Deduction.
Some credits and deductions haven't changed, but are still important to know about. There are credits for paying college tuition, student loan interest, or contributing to a retirement plan. There are also credits for energy-saving home improvements such as getting new windows and doors.
If you have any questions regarding how filling out your tax forms for this year, call a local certified public accountant and set up an appointment to discuss your tax return.