What is Tax Planning and Why Do I Need It?
The only constant is change. That applies just as much to your taxes as it does to anything else in life, and it’s why tax planning is so important.
The biggest tax change in several decades went into effect on January 1, 2018. It’s called the Tax Cuts and Jobs Act, and it can make a significant difference in the amount of tax you will pay.
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Income Tax Rates Change; Tax Brackets Shift
There have been changes to both the tax rates and the tax brackets themselves. Because of the new law’s provisions, you could see a change in your taxes… whether your income has changed or not. Some will see a decrease in their taxes, some will see an increase, and some will see no change.
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Standard Deductions and Personal Exemption Changes
Standard deductions nearly doubled and personal exemptions have vanished. These changes could also have a big impact on your taxes… especially for those who itemize.
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New Rules for Mortgage Deductions
Mortgage deductions now have a limit. You can only deduct the interest on mortgages up to $750,000. No longer can you deduct interest from home equity lines of credit. In fact, you can’t deduct interested for any loan not spent on building, buying or improving (significantly) your home.
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New SALT (State and Local Income Taxes) Limits
You can now only deduct up to $10,000 (total) of state and local taxes. That goes for property tax, sales tax, and income tax. If you have relied heavily on this deduction in the past, it’s time to take a look at your tax situation for 2018. There’s still time to change your withholding, for example, or to find other ways of reducing your tax bill.
What you pay in taxes is a matrix of calculations. It starts with your income, accounts for your deductions, and ends with an Alternative Minimum Tax calculation to see if any of that even matters.
Take heart, though. You still have six months to put yourself in the best possible tax situation for 2018. There are strategies that can be put into place now that can make a big difference in your tax bill come April 15. You can find those strategies with tax planning.
If you haven’t done tax planning this year, now is the time to consult with your Enrolled Agent.
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Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax & Accounting Services as well as the Enrolled Agent and Certified Tax Resolution Specialist for SFS Tax Problem Solutions.
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Now What? I Got A Tax Notice From The IRS. Help! Defining and deconstructing the scary and confusing letters that land in your mailbox. Jeff defines and deconstructs the scary and confusing letters in a fashion that mixes attention to detail with humor and an intricate clarification of what is what in the world of the IRS.
The book is available in paperback and ebook on https://Amazon.com
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For more on SFS Tax & Accounting Services, visit https://sfstaxacct.com/
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738 Colorado Avenue Stuart, FL 34994
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Phone: 772-337-1040
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https://twitter.com/SFSTax/
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