With the tax deadline fast approaching, we know you may still have some questions about how the laws have changed. That’s why the team at Martinson & Carter CPAs is always ready to offer helpful tax preparation advice. Check out these last-minute tax preparation tips before you file.
Standard Deductions and Itemization
The newest tax reform bill increased the standard deduction for all tax filers. Here’s a quick recap: Single filers are allowed a $12,000 deduction (so are people who are married filing separately). Heads of household are allowed an $18,000 deduction, while people who are married filing jointly and approved widows who care for a dependent child are allotted a $24,000 deduction.
Used to itemizing? Understand that the increased standard deduction may affect this process. You may find that these expenses will no longer total up to more than your standard deduction amount.
Homeowners and Families
Some homeowners may be able to deduct a certain amount of their mortgage interest. For instance, single filers can deduct interest on the first $750,000 of their home equity or mortgage debt that was used for buying or building their residential property. Married couples who are filing separately can deduct the interest on the first $350,000 of their mortgage or home equity loan. The new reform also limits the total amount you can deduct for state and local taxes. That figure is $10,000 or $5,000 for those who are married filing separately.
Parents should know that there have been some adjustments to child tax credits. The maximum credit amount for qualifying children has increased from $1,000 to $2,000, with around $1,400 of the credit that could possibly be refunded. Some families can get up to $1,400 as a credit backup or refund. However, parents should know that the maximum refund they can gain from this credit is equal to 15 percent of any earned income of $2,500 or above. If your family’s income exceeds $2,500, you might receive less of this full refund amount.
Whenever you have trouble managing your tax returns, including understanding any changes to the IRS code, don’t hesitate to call a professional. Contact Martinson & Carter CPAs for tax preparation help and strategies.