AUSTIN, Texas — There a little more than a month left to file your taxes, and you might have heard about tax returns being more or less this year because of some recent changes to tax laws.
We want to clear up some of the confusion for you.
Brian Pearson, president of American Benefits Exchange, has some tips.
What are some basic things people can start doing to get ready so they aren't pushing the deadline?
First, get organized. It can be a good idea to get all your documents together now.
Start gathering those forms – W2 forms, anything you might need to start the process, whether you file yourself or work with a tax professional. The new year can be a good time to sort through old papers and documents and set aside what you might need.
With the new tax law taking effect this year, what are some things people should know?
Tax bracket rates have changed, and standard deductions have almost doubled, but personal exemptions have been eliminated. What that could potentially mean for you is, for instance, interest paid on new home equity loans may no longer be deductible.
The new tax bill increased the child tax credit from $1,000 to $2,000 per child.
The new tax reform law has now added a smaller, nonrefundable "family credit" for other dependents, like elderly parents or children over the age of 18. For every dependent, families are potentially entitled to a $500 credit.
If you are planning on making any large gifts or donations, consider doing so before the year ends. A qualified charitable distribution is a good option for some individuals looking to minimize their taxable income.
Are there any other changes or new deductions that may impact families in the US?
There are several popular, small deductions that have been removed in the new tax law. For example, the deduction for alimony payments, moving expenses and tax preparation have been removed by the Tax Cuts and Jobs Act.
However, exemptions like the student loan interest deduction and the medical expenses deduction are still available.
The 529 savings account can now be used to cover private elementary or secondary school expenses, up to $10,000. For parents who may have students enrolled in private school, this could mean they receive savings on their students' tuition or other expenses.
We've heard reports of some Americans being surprised by owing the federal government thousands of dollars this year. Do you have any insights on who may owe money under the new tax bill?
In February of 2018, many Americans saw an increase in their paychecks due to the tax bill. With that increase in income, that also meant some will see a taxable income increased too. So some people could be paying in or receiving less of a refund than they are used to getting. To fix this moving forward, they should consider updating their W-4 on how much to withhold in taxes moving forward.
Others are potentially paying more this year due to what they can no longer write off. For example, SALT (State and Local Income Taxes) is capped at $10,000 now.