Tax Cuts and Jobs Act of 2017 – What you need to know
With the Tax Cuts and Jobs Act of 2017, many American may be in for a surprise this tax season. Follow these simple steps to make sure you are maximizing your return.
This past tax season saw the most significant changes to our current tax laws in over 30 years. The IRS is informing taxpayers to take the time now to make sure their deductions are correct to avoid surprises at tax time. Whether you are working full-time, self-employed or on pension, there is a high likelihood that the recent changes to the tax law will, in fact, impact your refund.
With the activation of the Tax Cuts and Jobs Act of 2017, nearly every taxpayer is impacted by these changes. If you are one of the millions of Americans claiming at least one dependent as part of your tax return, changes made to the child tax credit could substantially impact your refund. With an increase in the Child Tax Credit from $1,000 to $2,000 per dependent, and an increased income limit to qualify, more people than ever are in a position to take advantage of the credit – if you have accurately claimed your dependents on your W4. Taking the time now to make sure your dependents are correctly placed on your tax return is crucial.
Additionally, the TCJA changed many personal and dependent exemptions you may have claimed in years prior, while including new itemized deductions requirements for many taxpayers. For those that are self-employed, the TCJA also poses significant implications relative to their quarterly tax estimations.
While these changes may seem daunting to understand, proactively taking some quick, simple steps can ensure you will mitigate any surprises come April. Seeking advice from a tax relief expert, such as Optima Tax Relief can help. The IRS has a number of tools available to help navigate these new tax laws, including the withholding calculator, along with Form 1040-ES, a tool designed to provide an overview of what these tax law changes mean to you.
Still not sure where to start? Follow these simple steps to get ahead of your taxes now.
- Locate your 2018 Tax Return, along with your recent paystub (along with your spouse’s if you plan on filing jointly)
- Use the IRS Withholding Calculator to help you determine the correct number of allowances, as well as recommendations for adding a flat-dollar amount to your withholding
- Complete a new W4 and return to your employer (do not return directly to the IRS)
- Make sure to repeat this process whenever you experience a major life event, such as the birth or adoption of a new child, marriage, or buying a home (the IRS website lists all qualifying major life events that require an updated W4)