What The New Tax Bill Means For 2017 Tax Season
Everyone is talking about it – the New Tax Bill that was signed into law on December 20, 2017.
And the question most people are asking is, “Will it affect my 2017 taxes?”
No Changes Yet
The short answer is “no.” You’ll do everything the same this year that you did last year. If you itemize, you’ll itemize this year. All deductions are the same.
However, according to the IRS, as reported on foxnews.com, “We anticipate issuing the initial withholding guidance (Notice 1036) in January reflecting the new legislation, which would allow taxpayers to begin seeing the benefits of the change as early as February.” This means that you should notice a difference between how much money is withheld from each paycheck starting in February.
Standard Deductions Remain The Same
For the 2017 tax year, the standard deduction for single taxpayers is $6,350. In other words, you won’t get to use the newly passed $12,000 standard deduction when you file your 2017 taxes in April 2018. Likewise, married couples filing jointly will see a bump from $12,700 to $24,000, but that won’t impact their household finances until they file in April 2019. So, don’t start budgeting around that big tax return, yet.
Charitable Deductions Disappear If You Take New Standard Deductions
On another note, though, if you will benefit by taking the GOP tax bill’s increased standard deductions — and you previously deducted charitable contributions under the old tax plan — consider making your 2018 charitable donations before January 1st. When you go with the new, bigger standard deductions, you’re also agreeing not to itemize your returns, which means it’s not financially beneficial for you to give to charities in 2018. According to a recent article, “This is a point of contention for nonprofits and opponents of the bill. But, there is one way to make sure both you and charities benefit (at least at the moment), and that’s by putting your 2018 contribution on your 2017 taxes instead.”
In the meantime, you can check out how your tax bracket is likely to change under the new bill.
You can be certain it won’t be smooth sailing right away. The new tax reform bill is more than 560-pages long and it’s going to take some time for the IRS as well as tax preparers to understand the intricacies. Hopefully by the 2018 tax season we’ll have a better understanding to help you plan ahead for your taxes. In the meantime, if you need help with your 2017 taxes, give us a call.
And, if you haven’t filed your taxes in a few years, definitely give us a call. You could be eligible for additional tax relief. That is, if you were victims of Hurricanes Harvey, Irma or Maria may be able to deduct greater portions of hurricane disaster losses that occurred in Florida, Georgia, Texas, Puerto Rico or the U.S. Virgin Islands because part of the usual casualty loss limit does not apply, In addition, many victims can choose to claim hurricane disaster losses sooner by reporting them on their 2016 federal tax return if they have not yet filed or by amending their 2016 tax return if they already filed it in 2017.