With all that is happening, taxes may be the last thing you want to think about. Even so, it is good to spend some time doing a financial check at the midpoint of the year so avoid scrambling at the end of the year. If you are not aware, new tax reform was signed into law at the end of 2017. Some of these changes are temporary in that they will last in 2025; others will last until the tax code is rewritten again.
“Your Complete Guide to the 2018 Tax Changes” from The Motley Fool offers an overview of the changes to tax law that will affect you in the near future. We can look at a few of the changes but you will really want to consult with a Fee-Only financial planner to see how the changes may affect you and what you can do now to avoid surprises when you pay your taxes next year.
The marriage penalty: Before two people with a certain combined income would be in a higher tax bracket if they married than they would have been had they not married but now “the marriage penalty has been effectively eliminated for everyone except married couples earning more than $400,000.”
Standard Deduction: The higher standard deductions that are part of the new tax code mean that a large number of people will not need to itemize. However, you should know that a number of past deductions will no longer apply and these changes may affect your day-to-day life even if you do not have to put in the effort to itemize at tax time.
“Gone for the 2018 tax year are the deductions for:
- Casualty and theft losses (except those attributable to a federally declared disaster)
- Unreimbursed employee expenses
- Tax preparation expenses
- Other miscellaneous deductions previously subject to the 2% AGI cap
- Moving expenses
- Employer-subsidized parking and transportation reimbursement”
Again, checking in with a Fee-Only financial planner to see just how these new changes to tax law may affect you will help prepare you for next year’s tax season.