The tax reform bill passed by Congress in 2017 has resulted in a number of changes that are important to keep in mind as you begin preparing your 2018 tax return (that’s right; tax day is just around the corner now that the calendar has turned to 2019).
Some of the most consequential changes that tax payers and tax preparers need to be aware of include:
- The standard deduction is increasing to $12,000 for individuals, $18,000 for heads of household, and $24,000 for married couples who file jointly; this makes it less likely that you will be itemizing your deductions to maximize your refund or limit exposure
- The expenses incurred when moving to take a new job are no longer tax deductible; that makes it more important to negotiate items such as moving costs with your new employer as part of your employment contract or compensation package
- Deductions for state and local income and property taxes have been capped; this will be a crucial change for taxpayers in high-tax states such as California, who have relied on the ability to deduct their state and local taxes from their federal income tax
If you already owe back taxes, these changes could add new complications as you work to get your tax debts squared away. A mistake on your 2018 return because of these new laws will not be easily forgiven by the IRS, no matter how human it is to make mistakes when operating under a new system. When the IRS comes knocking at your door it is in your best interest to seek the help of a proven IRS tax defense lawyer.