We help you navigate the ins and outs of the new tax law and get the biggest refund—or lowest tax bill—possible.
Supporters of the Tax Cuts and Jobs Act said the new law would cut taxes for millions of Americans and shrink their returns to the size of a postcard, drastically reducing the amount of time required to file.
The tax overhaul will indeed lower taxes for many taxpayers, but the upcoming filing season—the first since the tax law took effect— could introduce new headaches, complications and unexpected costs. Deductions and other tax breaks that taxpayers have claimed for years have been capped or eliminated. Self-employed people will probably need to hire an accountant to navigate a new money-saving tax break. And that streamlined tax return? While the new Form 1040 is shorter than the old one, it comes with 117 pages of instructions.
The lengthy instruction manual is a non-issue for most taxpayers because the majority use tax-preparation software or hire a tax preparer. But even if you outsource your taxes, filing your 2018 return will probably require extra effort on your part.
To add another layer of complication, in mid-January the IRS was still shuttered as a result of the partial shutdown of the federal government. The agency announced it will bring back some (unpaid) workers to process returns and issue refunds even if the shutdown isn’t over by the time tax season starts on January 28. But don’t look for much live assistance from the agency. Its toll-free help-line numbers weren’t working during the shutdown, and the IRS’s taxpayer assistance centers were closed, too.
BIG CHANGES
The tax overhaul lowered tax rates across the board and expanded income thresholds, so more of your income will be taxed at the new, lower rates. For example, the top rate was reduced to 37% from 39.6%, and for a married couple, it doesn’t kick in until their taxable income exceeds $600,000. In 2017, that couple would have paid the top rate once their taxable income exceeded $470,700.
This story is from the March 2019 edition of Kiplinger's Personal Finance.
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This story is from the March 2019 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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