There is a myth being perpetuated that the new tax bill will be much easier for the taxpayer and will eliminate the need to use a tax preparer for most taxpayers.
Yes, the basic form is now the size of a postcard. But, there are five worksheets that might need to be completed. And they retain the old numbering system used in past years.
For tax year 2018, the standard deduction will be $12,000 for singles, $18,000 for head of households and $24,000 for married couples filing jointly, with adjustments for age and disabilities.
You will be able to use itemized deductions if the amount is higher. You can no longer use both in combination. It is an either-or situation, depending on the amount.
Thus, a single person with mortgage interest and charities amounting to $13,000 would itemize, since $13,000 is greater than the $12,000 standard deduction.
You would then calculate the tax on the remaining income.
There are credits to reduce the tax liability, such as earned income credit, other dependent-related credits, education credits and so on.
I was asked whether the new withholding rules will work. I don’t know.
If you have two or more jobs, normally run a deficit or often do not make adequate quarterly payments, you might owe more.
If your past Schedule A was substantial and you paid little or no taxes, consider making quarterly payments this year until you are comfortable with the new tax tables.
Until there is a year or two of experience with the new tax codes and revisions to come, it might be wise to be conservative and pay more. You can always find a use for a refund.
Virginia Moryadas is a tax preparation professional in Bluffton.