Tips Helpful Info for 2018 Tax Deductions



People like to procrastinate on their tax returns, usually putting it off until April. So you might consider it a little too early to be talking about this next upcoming tax season. In reality, 2018 is coming to a close. So why not start preparing to save as much money as you can from the IRS?


The point of this article is not to annoy you. The sooner you prepare for anything, the smoother things seem to go, and that peace of mind is what we hope you will get from these tips. If you don’t do the hands-on tax prep for your business or family, you can just send your accountant a link to this article. :)


So let’s dive in! Here is a list of tips and facts that we think you will find helpful once you do decide to get your taxes done.



Start Now - Not Later



Things are always less stressful when we prepare early. Waiting till January to organize your tax forms is one thing, waiting till April is a whole new level of stress. Now is a great time to put together a list of your tax deductions and collect receipts. As proper tax documents arrive in the first month of 2019, you will already be on top of things.



Put Your Receipts Together


This is something that’s best done through the year as your expenses happen. Collecting receipts for eligible expenses will keep the IRS off your back, although your electronic banking records will suffice in many cases. These receipts aren’t turned in with your taxes, they just provide proof if an IRS audit looks at your returns.


Record Your Charitable Giving


Giving to charity can make you feel good, this can also make you feel good when you do your tax returns if you are keeping track of your gifts to qualified organizations in your itemized deductions. Any contributions you make over $250 must include a statement from the organization acknowledging your gifts, so be watching for those in the mail to include with your tax returns.



Plan Your Taxes (Self-Employed Must Read)


If you are self-employed, you will need to figure out with your accountant how much taxes you should pay quarterly from your income since you are not getting income taxes taken out automatically by an employer. If you do not do this, you can expect a hefty tax bill.


Cover All the Bases on Tax Breaks


There are plenty of different tax credits and deductions for us to take advantage of, however, spending money just for the tax break can be a mistake if you don’t cover all the bases.


For example, you can give money to a worthy cause. But if the group or individual handling the donations is not considered a qualified charitable organization by the IRS, your donation will not be considered a tax write-off.


So be sure that your tax break is actually a tax break according to IRS law.


Now here are some noteworthy changes to the 2018 tax code that should be helpful when you do your taxes.




Noteworthy Tax Changes 2018



New Standard Deductions



Recently, the standard deduction was raised from $13,000 to $24,000 for married couples who are filing jointly.


Singles also have been raised to $12,000 standard deduction, up from $6500 last year.


Heads of households filing will get a deduction of $18,000, which is almost double from last year’s $9,550.


No More Personal Exemptions



Personal exemptions have been eliminated by the tax reform bill.


New Top Income Tax Rate



The top rate is not set at 37% for individuals earning $500,000 or more. Married taxpayers who file jointly get a top rate of $600,000.


New Estate Tax Exemption



The estate tax exemption has doubled. For 2018 individuals, the exemption is at $11.2 million and each couple is at $22.4 million.


Mortgage Interest



The deduction for interest is capped at $750,000 for any loan balance started after December 15th of the previous year. Any mortgage established before Dec. 15th of 2017 still has a $1 million limit.


Child Tax Credit



The child tax credit went up to $2,000 per qualifying child (under 17). Last year it was $1000. If you have a dependent you get a $500 credit who do not qualify for the child credit.


State & Local Taxes



Both income and property taxes paid during the year have an itemized deduction limit to $10,000.


Retirement Savings Contributions



If you are an employee taking part in a retirement plan such as a 401K or 403(b), 457 plan or Thrift Savings Plan, you are now able to contribute $18,500 this year which is $500 more than 2017.


Conclusion



We hope this information will help you get an early start on your 2018 tax returns. Giving yourself more time will hopefully lessen the stress of this year’s taxes and we also hope the information you gained here will help make things easier.