Tuesday, 12 March 2019

You've been filing taxes for years and you're ready to start on your 2018 return.

Like always, you're planning to deduct the interest you've paid on your mortgage and home equity line of credit. You've made several charitable donations during the year, and you have business expenses you can write off.

Well, you just might be in for a surprise this year. While Congress has made many changes to the tax code over the past decades, most of them haven't affected the majority of taxpayers. The changes lawmakers made in 2018 may be the most significant since Ronald Reagan was president. These changes will affect millions of taxpayers' 2018 returns.

Considering the extent of the changes, it's probably not wise to base your 2018 gains or losses from previous years. To be safe, take some time to familiarize yourself with the recent changes and determine how they might affect your 2018 return. And, of course, if you have concerns or questions as you begin working on your return, it's always wise to consult a tax professional.

Here are some of the 2018 tax code changes most likely to impact you:

  • Standard deductions. There have been modifications to the standard deductions
  • State and local taxes. During this tax season, there are significant changes in this area as well. Guidance on deductions for state and local taxes paid during the calendar year can be found here
  • Child tax credit increase. For 2018, the child tax credit has some nuances.
  • Mortgage interest. There have been changes implemented for homes purchased after Dec. 15, 2017. You can find more information on the home mortgage interest deduction here. 
  • Fewer forms. Two commonly used forms have been eliminated: 1040EZ and 1040A.
  •  Medical expenses. There have been alterations to qualifying medical and dental expenses of which you should be aware. 
  • Other deduction changes. These include deduction changes for business-related expenses (for individuals), moving expenses, job-search expenses, tax preparation fees, and investment management fees. 
  • Tax brackets. There are still seven brackets, but they have changed slightly.

This is far from an exhaustive list of the changes made in 2018, and there are possibly others that might impact you. Again, if you have questions or concerns, consulting a tax professional could help you avoid costly mistakes.

Where to get assistance with your return.

The good news is free or low-cost assistance is available from numerous sources. Here are a few:

  • Free Tax Preparation Software — If you make less than $66,000 a year, you qualify for free tax preparation software from the Internal Revenue Service (IRS). You will also find an interactive tax assistant on the IRS website. 
  • Volunteer Income Tax Assistance (VITA) – IRS-certified volunteers provide free tax help for people making less than $54,000, those with disabilities, the elderly or people with limited English. 
  • AARP — Seniors can get assistance with their returns through AARP
  • Tax preparation companies — Several tax preparation companies offer free online tax preparation that's available to anyone. However, these services are primarily designed for taxpayers with uncomplicated tax returns and basic filing needs. They include Credit Karma Tax, H&R Block, and TurboTax
  • The IRS has a directory of paid tax preparers who have the required professional certifications and have met certain IRS qualifications. You will also find a guide for hiring a tax professional on the IRS site.

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