Updated: Jan 4, 2019
As most of us have heard by now, tax filing for some may be a bit different this year than in years past. The tax reform that took affect in 2018 overhauled many of the standard rules we are used to following come tax time - specifically tax rates, deductible expenses, refund timelines and more. Here are a few noteworthy reminder highlights:
TAX RATES AND STANDARD DEDUCTIONS
Click here for a detailed breakdown of the new tax tables and standard deductions for individuals and families for 2018 from our affiliates at Bradford Tax Institute.
One of the biggest changes we will see in the coming months will be the number of taxpayers who no longer itemize their deductions because of increased standard deductions. The idea behind this change is that it will make the process of tax filing much simpler for many people and when combined with the lowered tax rates, will be more beneficial for many to claim the standard deduction instead of itemizing.
MEDICAL EXPENSE DEDUCTION
In past years, in order to deduct medical expenses for those under 65 who itemize, total medical expenses had to exceed 10% of adjusted gross income to qualify. For tax year 2018, that percentage is lowered to 7.5% of a household’s total adjusted gross income. If you are a planner, do note that for next year’s 2019 return, the percentage jumps back up to 10%.
REFUND ISSUING TIMELINES
Two years ago, we saw this change begin and last year, we experienced the same- delayed refunds for those claiming the Earned Income Tax Credit and/or the Additional Child Tax Credit. This year, refunds will be held for these taxpayers once again until mid-February. The IRS is doing this to help clean up the identity theft rate for these earlier filers, so be sure to plan accordingly if you are planning on claiming either credit.
The changes listed above scratch the surface but there are many more situations that will be affected by the new tax law. For a complete copy of the IRS publication, click here.
Remember, VDTA is here to help you understand these changes! Tax planning appointments can be scheduled at any time so no surprises come up when it is time to file!