Tax Update – Filing your 2018 taxes
By now, you’ve probably heard news reports regarding the tax law changes for 2018. Last year Congress enacted the largest tax reform in decades, and we want you to be aware of how those changes might affect your tax return.
Here are a few things to keep in mind as you begin working on your taxes. You are working on your taxes by now, right?
Tiffany and I met with a CPA yesterday who told us many of the tax advisors they know intend to file extensions for most of their clients this year. What does that mean? Many people will delay filing their tax returns until October 15 so they have more time to understand the new tax laws and tax forms. Don’t be surprised if your tax advisor suggests an extension.
2. The 1040 tax form has changed – We saw the new 1040 form for the first time last week and we were both shocked. It looks nothing like the form we’ve all grown accustomed to over the last 10 or 20 years. The IRS has completely reformatted the 1040 and included a handful of new schedules. You may need an extra hour just to figure out what you’re looking at!
3. You might be getting a smaller refund, or owe taxes – Most filers, particularly those still working, may have very different tax bills or refunds compared to past years. Part of the tax law changes for 2018 included updates to employer withholding schedules. This resulted in lower tax withholding for many workers throughout 2018, which means smaller refunds or owing money to the IRS in the end.
4. The IRS will be swamped – When you enact the largest tax reform in decades and then (essentially) shut the IRS down for 35 days between December and January, you should probably expect some extra delays and confusion. According to a recent report by the Taxpayer Advocate’s office, there are backlogs at the IRS for processing returns and refunds, along with major shortcomings in IT and help hotlines.