With tax season officially underway, you should make sure you understand how the new law could affect your tax return preparation. This is the first year taxpayers are dealing with the changes outlined in the recent Tax Cuts and Jobs Act. Here are some of the biggest differences you will see when preparing your 2018 taxes.

What Tax Code Changes Will Impact Tax Return Preparation? 

Larger Standard Deduction 

One of the most significant adjustments from the tax reform is the elimination of personal exemptions in exchange for a larger standard deduction. While the amount is considerably higher than the deduction provided in 2017, the boost might not be sufficient enough to offset the loss of personal exemptions if you have a larger household. The higher standard deduction also means less people will need to itemize. This has advantages and disadvantages as well, since the new limits placed on itemized deductions will cause some taxpayers to lose out on higher ones they were able to take previously.

Increased Child Tax Credit 

Parents will also see changes in their tax return preparation that work in their favor, as the child tax credit has been increased to $2,000 per qualifying child. This is double the amount from last year, making it available to a wider range of taxpayers. Even for those who don’t owe taxes, up to $1,400 of the credit can be refundable. Higher income limits on the child tax credit also give more parents the opportunity to use it. Joint filers can now earn up to $400,000 without losing the credit, and single filers can earn $200,000.  

Lower Tax Withholdings 

Payday withholdings were also reduced. This means people were getting tax cuts throughout the year as part of their take-home pay, though many weren’t aware this was happening. In turn, rather than receiving a bigger lump sum refund, their payout was being steadily distributed a little at a time with each paycheck. As such, many taxpayers may notice they aren’t getting as much back as they usually do. 

While each taxpayer’s situation is unique, the majority of people can expect these changes to have some impact on their tax return. Avoid making any filing mistakes this year by working with the professionals at Balanced Bookkeeping & Tax Services. They offer Lincoln, NE, residents expert tax return preparation at an affordable price. Call (402) 466-4272 to schedule an appointment, or visit them online for more information about their services.