TERRE HAUTE, Ind. (WTHI) - 2019 will be here before we know it. That means it will be time to for everyone's favorite yearly chore: filing taxes.
There are changes that will impact filing for individuals and businesses. First, let's dial in on changes individuals need to know about.
The Tax Cuts and Jobs Act will hit in a few ways. There are no longer tax exemptions for dependents. But, there is now a possible credit of up to $500 dollars for each non-child dependent. In some cases, taxpayers can help make up not getting the dependent exemption, with the child tax credit.
There are also new tax withholding tables. The tables are designed to help taxpayers avoid over or under withholding tax as much as possible.
Tax Masters President Thomas Jeffers says this may cause you to get a lower refund. However, he says that's no reason to be alarmed.
Jeffers explains, "What people are finding is their paychecks have been a little bit bigger. But, they're not going to make that connection at the end of the year that if their refund is a little bit lower it doesn't mean that the Tax Cuts and Jobs Act didn't help them, it just means that they got more in their check. So the key is going to be not what the refund number is, but how much tax did you pay compared to last year."
After talking with Jeffers, he says his business has already fielded many questions this year.
Jeffers explains, "From the moment the tax law was enacted, we have had non-stop consultations with current clients going over their situations."
The Tax Cuts and Jobs Act is also shaking things up for businesses. One advantage is the qualified business income deduction.
Jeffers shares, "It can be up to 20 percent of their qualified business income. Which is supposed to help lower their affective rate."
The lower rate could save businesses money. But, Jeffers says calculating that magic number is where the challenge comes in.
Jeffers explains, "The tax softwares out there to this date are not automatically calculating that number by just plugging in income and expenses. And so what we're finding is since that's a calculated entry and we have to manually enter it, that it's going to be very difficult for small business owners who are preparing their own tax return to come up with that number."
Jeffers says because of these changes, it might be best for you to go with a preparer. That's because they're trained to navigate all of the changes in tax code.
He says, "It's not necessarily that people who are doing their own tax return might be getting things wrong, they just might to be getting everything they can get. On the flip side of that, they may be taking things that they're not supposed to, and they will never find out until the audit letter comes."
Jeffers says people who wrote off their mileage or supplies purchased for work can't do that anymore. If you're questioning if this applies to you, Jeffers suggests you see your tax preparer.
To see other instances where the tax reform could impact you, click here.
The deadline to file your taxes for this year is Monday, April 15th.
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