Utah State University Extension
Happy 2019 everyone and how good it has been to see the winter precipitation! With the upcoming tax season the focus will be on the changes people experience on their tax returns due to the tax reform passed last year. The USU Extension Grand County staff will be entering our 11th year of providing a VITA (Volunteer Income Tax Assistance) free tax preparation site to help people with their taxes. In 2018, many of you likely started seeing the changes brought on by the tax reform by having some additional money in your paychecks but there are other basic changes to know about.
The rates within the federal income tax brackets saw some changes with the 10 percent bracket income amount rising slightly to $9,525. The next tax bracket lowered to 12 percent from 15 percent for incomes from $9,525 to $38,700, and the next lowered to 22 percent from 25 percent for incomes from $38,700 to $82,000 and so on. An interesting aspect of the first four brackets (out of seven total) was that the income range within each tax bracket only expanded in the 10 and 12 percent brackets but shrank in the 22 and 24 percent brackets.
While many in those brackets likely saw an increase in their paychecks, there is a concern that due to the way taxable income was calculated in 2018 there may be changes in what you get back or owe at tax time. It was suggested in 2018 that we each do a “Paycheck Checkup” and if you did not, as I suspect is the case with most of us, doing so now won’t help you with your 2018 taxes but could on your 2019 taxes. You can do this checkup by following the instructions and using the Withholding Calculator on IRS.gov.
Probably the most noticeable change this tax season is with the standard deduction, which rose from $6,350 in 2017 to $12,000 for single individuals, and $12,700 to $24,000 for those married filing jointly. This change will likely mean there will be fewer people itemizing in the lower tax brackets as it will be harder to find enough deductions to reach over the standard deduction amount.
A potential help for this year is that you can deduct unreimbursed medical and dental expenses that are over 7.5 percent of your 2018 adjusted gross income. For 2017, that was at 10 percent and it goes back to 10 percent in 2019. Also, while you can still deduct home mortgage interest when itemizing, a potential problem is that for this tax season the interest from home equity loans can only be used as a deduction if the funds were used to buy, build or improve your home but not when used for other purposes, such as paying off a credit card.
Another potential down side is that the personal exemptions we used to claim for ourselves, partners, or dependents has been eliminated. For example, a single person in 2017 had a standard deduction of $6,350 and a personal exemption of $4.050, for a total of $10,400. And now in 2018 there is only the $12,000 standard deduction, which is more beneficial. However, the concern is with larger families where you won’t get the personal exemption for each child or dependent. The positive note is that there are increases in the Child Tax Credit and also a new Credit for Other Dependents that could help.
So, these are just a few of the changes, but those most likely to be seen by the majority of us. I certainly hope your tax situation this year is a positive one.
Previous articles can be found on The Times-Independent website. If you have a topic you would like to know more about, call the Utah State University Extension Grand County office at 259-7558 or email Mike at firstname.lastname@example.org.