Headache Free 2018 Tax Preparation

It’s tax season! If those words send shivers down your spine, you’re not alone. Filing taxes is never fun, but this year may be extra intimidating as Americans experience the 2018 tax reform for the first time. Not to worry, we’ve assembled a handy guide to walk you through the process. Whether you plan to file yourself or use a professional tax preparer, these tips will help you ace your taxes this year!

Start by assembling your basic information. Make a list with the social security numbers for yourself, your spouse, and anyone else you plan to claim as a dependent. It can be useful to use a copy of last year’s return for a reference point so any credits or deductions you’ve claimed in years prior are listed in one place.

Next, you’ll need to gather any tax information forms you’ve received. If your compensation is from an employer, you should receive a W-2. Those receiving Social Security benefits will get form SSA-1099. There are a variety of 1099 income forms, including interest, dividends, gains or losses from securities, and more. You’ll need a K-1 form if you have an ownership interest in S Corporations, partnerships, trusts and estates, or LLCs. A full list of tax information forms can be found at the IRS.gov website.

Once you’ve gathered your information forms, you’ll want to focus on itemized deductions. One of the largest changes in the new tax code is the rise in standard deductions. Starting with the 2018 tax year, the standard deduction for single taxpayers is $12,000, married couples is $24,000, and heads of households is $18,000. This means less households will choose to itemize this year. If you’ve always taken a standard deduction and haven’t had much change in your situation this year, you’ll likely want to stay the course. If you’re still planning to itemize, or if you need to add up your expenses to decide which deduction will be better, you’ll want to gather up receipts for all qualifying expenses. This includes unreimbursed medical expenses, charitable contributions, mortgage interest, and state and local taxes paid, among others. 

In addition to the standard deduction changes, there are also changes to popular tax deductions and credits. Beginning this year, state and local taxes qualifying as deductions are capped at $10,000. Additionally, interest on home-equity loans can only be deducted if the money is used to buy, build, or improve your home. There are a number of miscellaneous deductions that have vanished as well, including tax preparation and investment fees, as well as unreimbursed business expenses.

Even though we’re already a couple of months into 2019, there are still a few things you can do to lower your 2018 taxes. Until April 15th, you can contribute to a Health Savings Account if you are covered by a qualified high-deductible health insurance policy. Depending on your age and coverage type, you can deduct up to $8,900 of contributions. You also have until April 15th to make a $5,500 contribution, or $6,500 if you are at least age 50, to an IRA. It’s not too late to reap extra benefits on your 2018 return! Contact the Marietta Wealth financial team today to help you organize your tax information.