The tax code usually changes at least a little bit from year to year. However, some years usher in bigger changes than usual. 2018 is one of those years!
New Standard Deductions
One of the biggest changes for 2018 has to do with the standard deduction amounts. In 2017, the standard deduction rates were:
- $6,350 (single filers) or $12,700 (married, filing jointly)
The new rates in 2018 are:
- $12,000 (single filers ) or $24,000 (married, filing jointly)
That’s a major difference. In both categories, the standard deduction has almost doubled!
What Does It Mean?
With the increases in the standard deduction amounts, there have been corresponding changes to the rules around itemized deductions. You can take either the standard deduction on your taxes or you can itemize your deductions.
When it comes to 2018 tax returns, though, folks who thought they had the itemized versus standardized deduction debate sorted out may have to revisit their decision based on these recent changes. There have been adjustments to how much you can deduct for:
- Medical and dental expenses
- State and local taxes
- Home mortgage interest
- Charitable deductions
- Casualty and theft losses
- Job expenses
Many of the final details regarding these changes are still being ironed out in Washington, so you should visit irs.gov for the most current information.
What Do I Need to Do?
The most important thing to look into now, at the beginning of 2018, is how the new standard deduction rates and the changes to itemized deductions might affect your choices and spending throughout the year, as well as your tax liability when it comes time to file.
If you were thinking about itemizing your deductions, does it still makes sense to do so? If you’re planning on taking the standard deduction, how will that impact how much you owe or how much you get in your refund down the line?
For help navigating these questions, you can contact a local tax professional at Taxation Solutions, Inc. We are here to provide information, clarity, and guidance to clients in San Antonio and the surrounding area. Let the experts at Taxation Solutions, Inc. help you get the lay of the land so you can make informed decisions about your spending and financial planning in the year ahead.