Congress passed major tax reform legislation that took effect the beginning of this year. These changes will likely change what you either owe or get back from the government this new tax year.
Tyrone Thomas, a tax preparer for Jackson Hewitt Tax Service, is a self-proclaimed “numbers guy” and started doing taxes in high school. He’s gotten very familiar with the tax reform bill that will impact almost everyone as you file your taxes this season.
“The major changes are that the personal exemption went away. That is on delay until 2025. The personal exemption for 2017 was $4,050. That was for each person that you claimed on your taxes. That’s gone away,” Thomas said.
The standard deduction almost doubled per category. For example, single taxpayers will see their deductions jump from $6,350 to $12,000. Both the tax rates and tax brackets have been lowered, as well.
“They adjusted the tax brackets by one or two percentage points, so it’s not a major change from last year,” said Thomas.
Other changes to note: the Child Tax Credit doubled from $1,000 per child to $2,000.
The bill also eliminates the tax penalty for not having health insurance, after December 31, 2018.
“Unless you adjusted your W-4 accordingly and had more withholding withheld, you’re going to see a slight change in what your refund’s going to be because you were getting an allocation in each paycheck you received during the year,” Thomas said.
Thomas expects a busier tax season because of these changes, but it’s not something he’s shying away from.
After all, he says many people refer to him as the tax man.
According to the IRS, in previous years, about one out of every three taxpayers itemized. Because of the new changes, it expects that number to be less for the 2018 tax year.