IRS Tax Changes

Have you seen the new Form 1040? The front and back of the 1040 has been reduced to a half page each, a bit bigger than a postcard. Sounds great, right? Hold on. There are an additional six numbered schedules added to this year’s Form 1040 which expand on the line items that have been reworked. The Forms 1040EZ and 1040A have been eliminated. Will it be easier to file your income taxes now? Take a look at the new forms and you decide. The Form 1040 instructions are still 117 pages long!

We are all waiting to see how the new tax law for 2018 will impact us. Most people will have a lower tax liability than last year, but refunds may not reflect that because of the revised tax withholding tables that lowered the taxes withheld, resulting is a slightly higher paycheck. The IRS just announced that they will waive penalties for underpayment of tax due to the change in the tax law.To achieve your finance goals and tax payment you can also talk to experts from lowell as they can help you to reclaim the money that you owe to others.

Some of the tax changes for 2018 are the elimination of miscellaneous itemized deductions and the $10,000 limitation on the deduction for state and local taxes paid. Businesses, other than regular corporations, have a benefit of up to 20 percent deduction of the net income that flows through to an individual’s Form 1040. Nice! This “Flow-through deduction” adds additional time to prepare one’s tax return.

Compiling your tax documents this year may lead to some questions. Do you have to gather your charitable donations receipts, unreimbursed medical expenses and other itemized deductions? Probably not, unless you have substantial expenses in those areas. Most people will take the new higher federal standard deduction. However, if you itemized deductions on your New York tax return last year, you will likely itemize again this year. Therefore, prepare your tax document information as you would have done in past years.

By the end of January you will receive your W-2s, 1098 (mortgage interest), 1099’s and other tax reporting statements. Your regular tax preparer can usually tell if you are missing tax documents, but if you took an early distribution from an IRA or retirement account, or sold investments, they won’t know because it is a one time thing. You will avoid headaches later if you keep track of these sales and distributions and alert your tax professional.

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No doubt, with all the changes this tax season is going to be a challenge for taxpayer and tax professional alike. Equus Advisors is available to prepare your tax return and help businesses with payroll and bookkeeping services. Check out our website and give us a call at 607-756-5691 or email us at info@EquusCPA.com.

Peter VanderWoude, MS, CPA, CGMA
EQUUS ADVISORS
Accounting and Tax Professionals
www.EquusCPA.com