With all that is happening, you may have seen a few headlines or heard a little about the tax reform bill that was passed this year but are you really prepared for how these changes will affect you when you file taxes next year?
Overall, as CNBC notes “The new legislation put through sweeping changes, including roughly doubling the standard deduction to $12,000 for singles ($24,000 for married joint filers), eliminating personal exemptions and trimming individual income tax rates.”
Earlier this year, we discussed how telecommuters will lose their home office tax deduction but there are other changes for employees who have taken on certain work-related expenses. CPAPracticeAdvisor.com states that while before now “you could deduct the amount of your miscellaneous expenses exceeding 2% of your adjusted gross income (AGI) for the year,” employees will no longer be able to write off expenses related to travel, work attire, tools, and union dues.
In, “Time is running out to use these 2018 tax-savings tips,”CNBC also offered tips for things you can do to alter next year’s tax bill as the year comes to a close.
If you were someone who withheld less from your paychecks because you were able to take advantage of so many deductions, consider changing your withholding. You can check the current year’s IRS Withholding Tables to see if you are one of the estimated 30 million people who are not withholding enough.
CNBC suggests, “If you’re just short of the newly doubled standard deduction, consider being a little more generous this year.”
In other words, you can use end-of-year gifts to charity to lower your tax bill. There are many organizations that would welcome a donation from you and they won’t scold you for waiting until late in the year.
You can also meet with a Fee-Only financial advisor before year’s end or early in the new year to plan for tax season.