If you’ve been putting off filing your taxes, you’re not alone. In 2017 more than 40 million people put off filing their taxes until April and this year is expected to be no different. While we’ve all come to expect yearly changes to tax laws, it’s never a bad idea to familiarize yourself with what’s new in the world of the IRS.
Withholding Status Changes
The IRS advises everyone to do what they call a “paycheck checkup” with their withholding allowances. Whenever tax laws change, such as the Tax Cuts and Job Acts for 2018, it’s very likely that withholding allowances changed as well. Your withholding allowance is what your employer sends to the IRS to determine how much to deduct from your federal taxes based on your filing status; single, married, or married but withhold at the single rate. You can find out more about changing or adjusting your withholding through the IRS’s Withholding Calculator.
Child Tax Credit Changes
If you have a child that was 16 or younger during the previous year, then you may qualify for the child tax credit. Starting in 2018, the child tax credit rose from $1,000 to $2,000 for dependents 16 and younger. Unlike previous years, the child tax credit also offers a 15 percent refund based on income.
That’s not to say there are no credits available if you have dependent children ages 17-24 living in your home. Under the Tax Cuts and Jobs Act, you may qualify for a $500 credit per child age 17-24 living in your home.
Know Your Deductions
Under the new tax rules, personal exemptions have been eliminated but increased the standard deduction to $24,000 for joint tax filers. Unfortunately, if you have many dependents or dependents over age 17, you may be subject to more taxable income.
Homeowners too may feel a pinch this tax season. If you purchased a home in 2018, state and local tax deductions are now capped at $10,000. Your mortgage and home equity interest deductions have also undergone some changes.
Skip the Prepaid Refund Card
Everyone wants their tax return as quickly as possible. The temptation to take an offer of receiving your tax return via a prepaid debit card is a temptation you should absolutely pass up. The cards often come with hidden fees that can eat up your return. Though it may test your patience a bit to wait, having your tax return received as a direct deposit into your bank is still the safest and fastest route.
Error Free Taxes
Make sure your tax forms are free of errors and you file all forms. The most common reason for an audit is due to extensive math errors or missing forms. While you may be in a hurry or be feeling the time crunch, do your best to get everything organized. If the task of filing taxes on your own seems overwhelming, seek out free advice; your local library or city may offer workshops or seminars on how to proceed with filing your taxes. The IRS has a Volunteer Tax Assistance Program aimed at helping you with the tax filing process.
Above all else, if you’re certain you’re not up to the task of filing your taxes on your own, seek out a professional to make the job easier.