Tax season is nearing, and concern related to the shutdown is in many people’s mind. Currently the IRS has issued a statement they are brining back part of their work force to accept filed tax returns. The IRS has been directed by Congress to pay out refunds from a permanent, indefinite appropriation and this is to happen despite the partial shutdown. The IRS has stated they are prepared and will start accepting filed tax returns January 28th and for most taxpayers this year the due date is the traditional April 15th.1
With the changes to the tax code being the largest we have seen in over 30 years I want to list some of the major adjustments people will see on their tax returns.
First the layout of the 1040 truly is small enough to fit on a “large” postcard. They have simplified the income and expenses and currently plan to replace the 1040ez and 1040A with this new style. A current copy can be found HERE at the IRS website. Additional schedules and forms might accompany this depending on individual circumstances.
A second change for this upcoming tax year is the doubling of the standard deduction. This will affect many people as a Married couple filing joint will now be required to have more than $24,000 in write-off, a single person or married couple filing separately is required to furnish $12,000, and a person claiming Head of Household is required to show $18,000 to make itemizing beneficial. There are some tax scenarios where forcing a lower itemized return might be more beneficial, especially if you live in Georgia. A qualified tax advisor will be able to determine which scenario is best for you.
A third, and commonly misunderstood, change is related to rental property and write-offs. Many people have come to believe they will not be able to write off the property taxes of their rental homes and land because there is a $10,000 limit on tax write-offs. The limit is true but applies to your personal use property and land. On Schedule A you are limited to a total tax write-off of $10,000. This includes personal property (car, boat, house, etc.) and the income tax you pay to the state. Once you reach the $10,000 limit you max that part of your deduction. However your rental property taxes are reported on Schedule E (no major changes on this schedule) and are not subject to the $10,000 limit.
With many other changes ensure that your preparer is staying on top of the new laws and has a grasp of fully understanding how to integrate your individual situation with the new laws. There are many other changes and I will post on them in the upcoming weeks getting ready for tax season.
Our office is open to schedule appointments for both tax preparation and filing as well as tax planning should you need it. Please call 706.814.0178 and if we can’t get to your call please leave a voicemail and we’ll follow up as quick as we can.