The New Tax Law
The Tax Cuts and Jobs Act has affected millions of taxpayers since the start of 2018. It is important to start planning now so you can avoid some of the pitfalls caused by the new tax law. You should consult the experts at Bradshaw & Associates to help you navigate the multitude of these changes.
UPDATE YOUR WITHHOLDING
Check your W-4 as early as possible. The new tax law eliminates personal exemptions, so neglecting to adjust your exemptions could result in lower withholdings from your paycheck. This mistake may put you in a position where you owe more than you should.
However, the lack of personal exemptions does not guarantee a higher tax rate. One major change presented by the Tax Cuts and Jobs Act is that the standard deduction nearly doubled for single and married filers. If you take advantage of the standard deduction instead of itemizing and make sure you have your withholdings in order, you could end up saving more on taxes.
The new tax bill changes the medical expense deduction. Taxpayers who spend more than 7.5% of their adjusted gross income on medical expenses can deduct those costs, much lower than the 10% threshold it has been previously. More families with persistent medical needs can now offset those costs more effectively.
The opportunity to deduct hefty expenses like mortgage interest and property taxes has long been a financial advantage to owning a home. These will continue, but lawmakers have tightened the cap for mortgage interest. homeowners may only deduct interest on loans up to $750,000, down from $1 million, for money borrowed after Dec. 14, 2017. State and local tax deductions were reduced even more dramatically. Taxpayers will now only be allowed to deduct a total of $10,000 from their federal tax bill, including income, property, and any other taxes owed to state and local governments, whereas previously it was unlimited.
CONTACT US IN COLORADO SPRINGS FOR TAX PLANNING SUPPORT
The new tax law can seem a bit overwhelming, and understanding how the changes will impact you is very important. Bradshaw & Associates understands your concerns and are ready to help you make sense of the changes and use them to your best advantage. Contact us today for a comprehensive tax consultation.