It’s a new year and a new tax situation. Recent changes to the tax code are coming into effect this year, and we want you to be prepared with all the information you need.
Bigger Standard Deductions
The standard deduction for individuals and joint filers have seen a big increase. In 2017 the amounts were:
- Single filers: $6,350
- Joint filers: $12,700
- Head of Household filers: $9,350
The new 2018 amounts have almost doubled:
- Single filers: $12,000
- Joint filers: $24,000
- Head of Household filers: $18,000
The pleasant news about these increases is that a lot of folks will owe less in taxes if they normally take the standard deduction.
However, individuals and families that are accustomed to itemizing their deductions may not see as much of a benefit since many itemized deduction categories are going away.
Say Goodbye to Some Itemized Deductions
Typically, people itemize their deductions because that amount is greater than the standard deduction. With these recent changes, though, many expenses that people used to itemize won’t qualify anymore.
For example, previously, you could list itemized deductions for state and local taxes including:
- Income tax
- Sales tax
- Property tax
Under the new rules you can still take some of those deductions, but the amount is capped at $10,000. So, if you live in an area where taxes are high, you might see a change in how much you can deduct (meaning your tax liability may be higher).
Itemized deductions related to home offices, tax preparation costs, and other job-related expenses have also been eliminated. So, even though the standard deduction amounts are greater across the board, they may not spell tax savings for everyone.
In order to understand how these recent tax changes affect you personally, contact the team at Price Advantage Accounting We are available to help individuals and businesses in Orlando navigate the new tax landscape so you can make informed financial decisions in 2018 and beyond.