Americans should check their withholding levels to make sure they won’t owe taxes or overpay
WASHINGTON, Feb. 14, 2018 /PRNewswire-USNewswire/ — This year and next year, tax time will be even trickier than usual as Americans adjust to the changes from the recently enacted tax law, including adjusting their withholding, according to Senior CFP Board Ambassador Jill Schlesinger, CFP®.
The IRS expects more than 155 million returns to be filed this year, of which more than 70 percent should receive a refund. The filing deadline is delayed. Procrastinators should mark April 17, rather than April 15, as their drop-dead date. The IRS typically audits less than 1 percent of individual tax returns.
Although the IRS has already begun accepting electronic and paper tax returns, paper filers will find that the agency begins processing paper returns later. Choosing e-file and direct deposit for refunds remains the fastest and safest way to file.
Feel the pain in 2019
Americans will feel most of the changes stemming from the tax overhaul next year, in the 2019 tax season, Schlesinger said. But there are a few items people should be aware of:
The IRS has created new withholding tables, but the recommended amounts may not be enough to cover many taxpayers, especially those in high tax states who could lose certain deductions. To be safe, at least for the first year of the new law, Americans may want to assume their tax liability will be at least the same as this year. Taxpayers can work with the human resources department at their employer to set their withholding levels.
The new law allows people who itemize to deduct qualified medical and dental expenses that exceed 7.5 percent of adjusted gross income (AGI). That’s a lower threshold than the previous 10 percent. The level returns to 10 percent beginning Jan. 1, 2019.
The new law repealed the individual mandate to carry health insurance. But taxpayers still need to provide proof of coverage for 2017 this year. Those who don’t have it will pay the penalty, which is the higher of 2.5 percent of your AGI, or $695 per adult and $347.50 per child, up to a maximum of $2,085.
A CERTIFIED FINANCIAL PLANNER™ professional can help Americans’ prepare their taxes, manage inevitable changes in tax law and develop strategies to minimize taxes over time.
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