Tax time is here, and the new year has begun so now is a good time to start thinking about next year, and there’s a lot to think about. There are new tax cuts will be taking effect. This will include some changes ranging from your tax withholding at work to a higher standard deduction and a loss of certain itemized deductions. With all this in mind this is a good time to start reviewing your personal positions and make sure you can take advantage of the changes.
For most people who have a regular job the most important area to look at will be the W-4. This key document is where you tell your employer how much federal income tax to withhold from your paycheck based on the number of dependents you have. It also indicates whether you itemize deductions and whether you have multiple sources of income.
Coming up with the right number for withholding has different values that will change the answer. With the new tax cuts, personal and dependent exemptions are out. It is also expected that fewer people will itemize deductions on their 2018 tax returns because of the doubling of the standard deduction.
There will be those people who still need to itemize, the increase of the standard deduction will mean that they must increase things like charitable donations so that they can meet the new threshold.
Under the old tax laws, you could borrow against your home and deduct the interest paid on loans up to $100,000 regardless of what the money was used for. Under the new tax laws this will no longer be the case. Now if you borrow against your home you won’t get a break unless you use the money towards purchasing or improving the home that secured the loan.
Any time is a good time to increase your contributions to your 401K. There are many more ways of taking advantage of the new tax laws. Talk to a professional now and see where you stand.