Changes this tax season
Most people do not look forward to filing taxes, especially with a new tax law in place for the first time in decades. Those changes can induce confusion and stress. This will be the last year for several tax credits as well as the beginning to benefit from some new ones.
Several tax credits are eliminated for the 2018 tax year. However, they are still available for your 2017 tax return. “This will be the last year to take advantage of some deductions, so it’s important not to miss out on them,” says Ellsworth Buck, Vice President of GreatFlorida Insurance, Florida’s largest independent homeowners insurance agency.
Investing information company, The Motley Fool, reports this will be the last year to take advantage of the following tax breaks.
Property tax deductions
Mortgage interest deduction on home equity loans
Unreimbursed employee expenses
Tax preparation fees
Investment-related legal and accounting fees
Job search costs
While several tax breaks will expire after this year, there are new ones are available for this year’s returns. “This year is unique with overlapping changes, so make sure your taxes are filed correctly, to avoid overpaying the IRS,” warns Buck Vice President of GreatFlorida Insurance, Florida’s top independent homeowners insurance agency. Error rates for returns filed on paper are at 21 percent, while error rates for those filed electronically are less than one percent.
Some changes in tax deductions and credits are listed below.
Tax brackets expand. According to personal finance resource, GOBankingRates, “the federal income tax system uses a progressive tax structure, meaning that as you earn more income, your tax rate goes up as well.”
The Standard deduction, will experience a slight increase.
Health savings account– an increase to the contribution limit.
Earned income tax credit– the maximum income you can have while still qualifying for the EITC increased for each filing status. Also, you can have up to $3, 450 of investment income annually while still qualifying for the EITC.
Retirement savings credit-there is an increase in income limits.
Increased employer-paid parking or transit tax breaks