Even if you do not know for sure if the new laws will result in higher refunds for taxpayers, it is time to start preparing for the tax season. Here are some important things to keep in mind when developing your tax records for the 2018 fiscal year.
1- Pay attention to your withholding
Tax reform has reduced the amount of money withheld from paychecks from many taxpayers in 2020. As a result, paychecks have gotten larger, which can result in lower refund checks for many people. The IRS will double check to make sure your refund is correct. You can make changes to your payroll withholding on a W-4 form with your employer or by checking estimated tax payments to avoid paying fines and interest.
2- Predict the refund
The tax reform will likely affect the refund amounts in several ways. High standard deductions, lower tax rates, and higher child tax credits can boost returns. Reducing personal exemptions, restrictions on certain detailed deductions, and gradually removing various other tax benefits may decrease them.
3- Observe the special rules of Social Security
If you need to file your taxes but do not have a Social Security number, the IRS will issue what it calls the Individual Taxpayer Identification Number (ITIN). The ITIN has the same function as Social Security for tax purposes for nonresident aliens, resident aliens, dependents, and spouses.
4- Stay alert to new tax forms
Many taxpayers will have to use the new structure for the first time in 2019. Everyone will use a simplified version of FORM 1040 that has been shortened to look similar to the 1040-EZ and the 1040A.
5- Know where to look for help
The tax reform might be confusing, but there is help available. There are online assistance and taxpayer assistance centers so people can get the information they need to prepare their taxes successfully.
Organizing all of your documents at this point in time may seem difficult, especially with the changes that have happened recently. If you do not feel comfortable to prepare your taxes yourself, please get in touch with our staff, who will be happy to help you get everything ready for when the tax season officially opens.