It’s not too early to start planning for the 2018 tax return. With all the changes the new tax law has introduced, be prepared to see an increase in the cost of tax preparation for the more complex return.
Simple returns will remain simple to calculate. The new form 1040 puts all the required information on two pages, or one page front and back, to fit the definition of “postcard.” Everything else is on separate forms or schedules.
The biggest changes occur for business returns with pass-through features. This means that filers receiving or preparing Schedules C, E and F, Forms 1065 and Forms 1120s might need to do the additional calculations to fill out line 9 of the Form 1040.
IRS estimates that to complete line 9, if applicable, should only take 2.5 hours. Do not be surprised if the cost of preparing such returns increases by 20 percent to 25 percent.
IRS has closed all e-filing and does not expect to resume e-filing of returns until sometime in February. If you expected to be able to e-file your return in late January and get an immediate refund, forget it.
We still have not seen Tax Reform 2.0, which Congress hopes to pass before they go home for the Christmas recess. The 200-odd page document includes some technical corrections and who knows what else.
In the meantime, allocate a secure location for storing your relevant tax-related documents as they come in. Help yourself and your preparer by including in the storage area your 2018 (all 12 months) bank statements, credit card statements, etc., which contain details of the year’s income and spending.
Many credit card companies only store or allow on-access for 12 to 13 months, so if you are a person who throws out statements after paying them, plan to download copies before they disappear.
Remember you will be taking only the revised standard deduction or itemizing, not both.
There are changes this year to the tax codes that are affecting everyone. Be prepared.
Virginia Moryadas is a tax preparation professional in Bluffton.