Every time a new tax law is introduced, it can be a confusing time for everyone. Many Americans are unsure or even scared of how the new policy might affect them.
There is no need to be frightened, however. Though this new law will absolutely affect you, there is nothing to be scared of.
We’ve put together this list of five ways that the new tax law affects you so that you can be prepared going into this new tax period.
Read on to learn how you might be affected.
The first thing about the new tax law that you need to be aware of is that both personal and dependent exemption deductions have been eliminated.
Because of this, you will want to ensure that you double-check how much your employer is withholding. If you don’t make adjustments in light of the new law, it is possible that your employer doesn’t withhold enough from your paycheck.
There are some provisions, however, so you will want to research to see if you qualify to retain your dependent exemption deductions.
The maximum child credit has doubled under the new law. For 2017, for each qualifying child under the age of 17, you could earn a $1000 tax credit. Under the new law, you will be able to get $2000.
The maximum income levels to qualify for these credits have been increased as well, so more families will be able to reap these benefits.
One of the best benefits of the new tax law is the new policy for medical expense deductions.
According to USA Today, “Taxpayers who spend more than 7.5% of their adjusted gross income in either 2017 or 2018 on medical expenses will be able to deduct those costs. That’s lower than the previous 10% threshold.”
So if you have been putting off a medical procedure because of the cost, 2018 is the year to get it done. You could qualify for financial benefits in addition to the health benefits you’ll be gaining.
A great benefit is that standard deductions will now be nearly doubled under the new plan.
According to CBS News, this is increase is from “$6,350 to $12,000 for individuals, and from $12,700 to $24,000 for married couples filing jointly.”
Unfortunately, however, the majority of individual provisions will be expiring after the year 2025.
It is possible that Congress could extend these provisions. But at least for right now, they will be expiring in seven years.
For at least the short term, however, most Americans can anticipate getting the tax cut promised by the new bill’s name.
How are you feeling about the new tax law? Will it benefit your family’s situation? Do you still have questions about how the new law will affect you? Feel free to contact us!
If you are looking for help with your taxes or any other accounting needs, please check out our services and see if we could help you out.