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The Tax Cuts and Jobs Act that Congress passed last year brought many changes to the tax law. With that in mind, it is important to meet with your CPA or CFP® to do a checkup on your taxes. If you are high income or have a complex return, it is advisable to schedule some time to look over the taxes and implement some tax saving strategies that might be available for you. Doing so could save you thousands of dollars.
Here are some of the law changes that could affect your taxes:
- Remember that there were changes made to the tax rates and brackets.
- The child tax credit was expanded.
- There is a $10,000 cap on deductions for state and local property, sales and income taxes.
- If you itemize, you may not need to anymore as the standard deduction nearly doubled to $24,000 for joint filers and $12,000 for singles.
- In prior tax years, deductions for miscellaneous expenses had to exceed two percent of a filer’s income to qualify. However, now there will be no deductions for miscellaneous expenses such as travel, meals, entertainment, and uniforms.
- Higher limits on the percent of income a taxpayer can deduct as charitable contributions.
- New limits were implemented on deductions for some mortgage interest and home equity debt.
You can help prevent an unexpected tax bill and penalties next year just by knowing these nuances. Adjust your withholding as soon as possible for the rest of the year if necessary.
You will also need to determine if they should make adjustments to their state or local withholding. Visit your state’s department of revenue for help concerning those taxes.