Tax season is in full swing and presents its challenges for the 155 million taxpayers who plan to file with Internal Revenue Service (IRS) this year. Here are some basics to know that will help you navigate the process.
Check Your Withholding.
In light of the passage of the “Tax Cuts and Jobs Act of 2017,” many changes have been made to the tax code for both individual and business taxpayers. The IRS issued new tax withholding tables earlier this year to help taxpayers determine the proper amount to withhold. Use these tax tables to avoid unexpected surprises at tax time or consult your tax advisor for more information.
Claiming Personal Exemptions.
The 2017 tax year is the last year individuals will be able to claim personal exemptions on their tax return. The “Tax Cuts and Jobs Act of 2017” eliminated personal exemptions for 2018 and beyond. However, the standard deduction has been increased from $6,350 to $12,000 for individuals and increased from $12,700 to $24,000 for couples filing jointly. In addition, the Child Tax Credit has been increased from $1,000 to $2,000 per qualifying child, with much more generous phase-out limits.
Track Your Refund.
Once the IRS accepts a tax return, taxpayers can track the status of their refund. This provides taxpayers with the ability to determine when they can expect to receive a check or direct deposit (as indicated by the taxpayer on their tax return) and to ensure that someone else does not fraudulently receive their refund. Go to www.irs.gov/refunds and be sure to have the social security number of the primary taxpayer, the filing status and the exact refund amount to track the refund. Refunds can also be tracked on the IRS2Go app.
Is It a Good Thing to Receive a Large Tax Refund?
Everyone loves seeing a large deposit into his or her bank account at tax time. However, this may not be the most efficient way to settle the score with the IRS. Receiving a large refund indicates that the taxpayer gave the IRS an interest free loan for the previous year. By adjusting the withholding as discussed above, taxpayers can receive more money in their paychecks throughout the year and use the money for all of life’s needs rather than wait for the IRS to pay the taxpayer back their own money.
Trust Your Tax Preparer.
Your tax preparer should be someone you trust who advises you in a manner that provides you with the most tax benefit while adhering to the Internal Revenue Code and the preparer’s professional ethics requirements. Be sure to check the preparer’s qualifications on irs.gov. Preparers should have an active prepare tax identification number (PTIN). The most common preparers are Certified Public Accountants (CPAs), attorneys and Enrolled Agents (EAs). Taxpayers should never be asked to sign blank tax returns and should always review their returns before signing.
By Michael J. Cintineo, CPA
Michael J. Cintineo is the owner of Cintineo CPA LLC, a fully licensed accounting firm specializing in tax preparation, tax planning and bookkeeping services for individual and small business clients. Contact Michael regarding your 2017 tax return as well as what impacts you can expect under the new tax law via email at email@example.com or via phone at (201) 914-2721.