Tax Day, April 19, is quickly approaching - it's only a month away! This tax season is the first one when the Tax Cuts and Jobs Act of 2017 will go into effect. This means that you will feel the effect right in your wallet for the 2018 tax year.
Here are 3 things that you can expect to see come April:
1. Changes in tax brackets. Tax brackets have been adjusted; while there are still seven federal income tax brackets, they have slightly lower rates and the income ranges have been adjusted.
2. Deductions. As always, you will be able to choose between taking standard deductions and itemizing your deductions. However, this year, the standard deduction is approximately doubled from previous years. If you combine some reduced, capped, or eliminated deductions, it may move you from an itemized deduction household to a standard deduction household this year. While change is always scary, this may actually simplify things for you.
3. Child tax credit changes. The Child Tax Credit in 2017 was $1,000 per child, which means previously your tax bill would be directly lowered by $1,000 per child. Starting this year, you can deduct $2,000 per child from your tax bill! There are income limits to this change, but the restrictions are significantly higher than prior years. While it might seem intimidating to go through tax season this year taking into account the most significant tax code change in 30 years, there are some significant benefits that you may experience with the new laws. If you have more questions or need to get an appointment with a CPA before April 15, give our office a call.