You May Not Want to Wait Too Long to File Your Taxes to Avoid Potential “Surprises”
There are some changes to the tax codes that went into effect with the 2018 tax returns that are due by April 15, 2019. You may want to prepare your taxes earlier this year if you have been someone who has waited to the last minute, that way you can be aware if you are receiving a lower refund that in the past or if you might potentially owe money, giving you some time to consider how to pay if necessary. If you are owed a refund, consider electronically filing and having the refund directly deposited as this will speed the processing and receipt, versus paper tax returns and checks having to be mailed.
The standard deduction for individuals was raised to $12,000 and for married couples filing jointly to $24,000. This may have the impact of fewer people itemizing their deductions. For the charitably generous (those who give more than the standard deduction amount) or for those with large mortgages, itemization may still be beneficial.
In general, most tax brackets have lower tax percentages this year. The child tax credit and earned income credit are higher. One area, however, that has proven somewhat challenging for some taxpayers in higher property tax states like New York is the capping of state income tax, sales tax, local and property tax deducation at $10,000 this year.
It is important to consider if you are withholding enough money from your paycheck to account for potential changes in your taxation since personal and dependent exemptions are no longer allowed. Seek professional advice from your accountant, tax attorney, or tax preparer to address any concerns that may rear up this tax season so that you do not have ongoing challenges. You may need to possibly file a new W-4 form with your employer if there have been changes in your personal situation so that you withhold the appropriate amount from your pay for federal tax purposes.
I do not personally render taxation advice and am providing this information for your general educational purposes only and not as advice for any specific individual. Seek professional advice before taking any action in regard to your finances.
Todd A. Slingerland, CFP®
6 Tower Place Albany, NY 12203