This has been a tumultuous year for taxes, with the tax reform that passed in late 2017 generally becoming effective in 2018, often with significant changes for both individuals and businesses. This is the first major tax reform legislation in more than 30 years, and to implement it, the IRS will have to create or revise approximately 450 forms, publications and instructions and modify around 140 information technology systems to ensure it can accommodate the newly revised or created tax forms, not to mention writing tax regulations for all of these changes – a daunting task for sure. The following are issues that could affect you and that you may need to plan for.
Tax reform has changed the way most taxpayers need to think about and plan for their taxes. It is no longer business as usual, and those who think it is are in for a rude awakening come tax time next year.
For most taxpayers, the most significant change is the increase in their standard deduction, which on the surface seems like a big benefit. But don’t overlook the fact that the same tax reform that nearly doubled the standard deduction took away the personal exemption as a deduction. So, for example, under old law for 2018, a married couple’s standard deduction would have been $13,000, and their two personal exemptions would have been $8,300 (2 x $4,150), for a total deduction of $21,300. Under the new law, they will be able to deduct $24,000, the new standard deduction for 2018. So, their total increase over what they would have gotten under prior law is only $2,700. If they have four children, their deductions for 2018 under prior law would have been $37,900 ($13,000 plus 6 x $4,150), as compared to the new law’s $24,000. However, for individuals with children under age 17, the child tax credit for 2018 was increased to $2,000 (with $1,400 being refundable) from the prior $1,000, in many cases making up for the loss in the exemption deduction. Note that a credit is a dollar-for-dollar reduction of the tax, while a deduction reduces the income that is taxable.
If you’re like most taxpayers, you find yourself with an ominous stack of “homework” around TAX TIME! Pulling together the records for your tax appointment is never easy, but the effort usually pays off in the extra tax you save! When you arrive at your appointment fully prepared, you’ll have more time to:
Consider every possible legal deduction;
Evaluate which income reporting and deductions are best suited to your situation;
Explore current law changes that affect your tax status;
Talk about tax-planning alternatives that could reduce your future tax liability.
“Where’s My Refund?” is an interactive tool on the IRS web site at IRS.gov. Whether you have split your refund among several accounts, opted for direct deposit into one account, or asked the IRS to mail you a check, “Where’s My Refund?” will give you online access to your refund information nearly 24 hours a day, 7 days a week.
This is a question many taxpayers ask during this time of year, and the question is far more complicated than people believe. To fully understand, we need to consider that there are times when individuals are REQUIRED to file a tax return, and then there are times when it is to individuals’ BENEFIT to file a return even if they are not required to file.
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Lake Wylie Tax Service | Bookkeeping | Payroll Service
Our goal is to provide your Individual or Business Tax Preparation for many years to come, not just this year. That’s why our professional staff is trained to provide every service you’ll need, now, or in the future.
Or team provides year-round tax preparation, general accounting, and support solutions tailored to your unique needs. We will minimize your tax liability and maximize your tax breaks.
Tax Preparation and Services:
Individual Income Tax Preparation
Small Business Tax Return Preparation
Partnership Tax Return Preparation
Corporate Tax Return Preparation
Estate Tax Return Preparation
Gift Tax Return Preparation
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Tax Identification Number Application Preparation
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