With a new President in the White House and a new year ahead of us, it is important to keep up-to-date on the laws for taxes to ensure that you do not run into trouble with the IRS or miss out on saving yourself some money. As of 2018, there have been changes to the income tax brackets, deduction values, and more so our Coral Springs accountant group has laid out a guideline below to help you understand the changes and how they affect you.
Changes to the Tax Brackets
Perhaps the most important and applicable of the changes are the changes to the tax bracket you fall into based on your income. For most of the brackets, the tax rate has been lowered while the range of incomes they encompass has shrunk slightly.
For example, before the changes a single income of $38,700 – $93,700 would have paid a 25% tax rate. As of 2018, a single income between $38,700 and $82,500 would pay only 22% – a 3% difference with an $11,200 range difference. However, even if you exceeded the upper $82,500 limit for 2018 with a $90,000 income, the next bracket would still only require you to pay 24% as opposed to previously costing you 25%, meaning that you will still pay less in tax.
Additionally, the income ranges for those who are married and file jointly have been changed to align better with the new income ranges for single filers. With the new changes, the ranges are now exactly double those of the single filers for all but those who earn a combined $400,000 or more a year. This helps to take some of the confusion out of deciding how to file, and simplifies the filing process overall.
Deductions, Exemptions, and Tax Breaks
Another significant change for 2018 comes in the form of the removal of personal exemptions in favor of a larger standard deduction. The standard deduction is the maximum amount you can deduct from your income without providing an itemized deduction list, while a personal exemption allows you to deduct more than the standard deduction, permitting you have the expenses to deduct. This benefits the majority of Americans, as it is believed that only about 30% of taxpayers benefit from itemizing. However, be sure to consult with tax preparation services in Coral Springs to find out which option is right for you.
The changes are as follows:
Educational tax break rules have remained relatively unchanged, with the primary change involving 529 accounts. The tax-exemption status placed on funds taken from 529 college savings accounts has been expanded to cover additional educational expenses such as tutoring, private school fees, and more to encourage the use of these accounts.
Parental tax breaks have also been changed, doubling the Child Tax Credit (a credit earned for each qualified child under 17) to $2,000, and increasing the refundable portion of the credit to $1,400. In addition to the increase standard deduction, this allows for parents and families to save more money that they can put towards their children.
Overall, these changes appear to be beneficial to the majority of taxpayers, especially families with children. The tax rates are lowered for lower earners, the deductions available seem to have increased, and the concept of taxes overall seems to be simplified slightly. However, taxes can still be confusing so be sure to talk to a Coral Springs accountant to talk over your financial situation and figure out the best way to save you money. Professional tax preparation services in Coral Springs like our firm Andrews and Company can help take the stress out of tax season and help you avoid the dreaded IRS.
Andrews February 27th, 2018
Posted In: Tax
The good news is that small businesses qualify for an almost innumerable amount of deductions—however, knowing what exactly qualifies as a deduction can be difficult, and many small businesses miss out on many small deduction opportunities that could really add up in the end. To help small business owners better understand deductions, our accountants in Coral Springs offer these 5 tips for small businesses:
Coral Springs Tax Preparation Tips
#1: Be a dedicated record keeper
Keep careful records of even small expenses. Keeping receipts is important, and you should make sure you make a note on the receipt to remember what the expense was for. You can also keep track of small expenses you might not have a receipt for: postage, parking and meters, public transportation fare, office supplies, etc. It’s also a good idea to log your travel, such as start and end points, miles traveled, and other car expenses, so that you can have an exact measurement to report on your deductions.
#2: The “hard way” can really pay
The IRS has some general numbers you can plug in to generate your deductions—but by trying the different calculation methods the IRS provides, you can choose which method benefits you the most. If combined with meticulous record keeping, you could really start to see the deductions add up.
#3: Personal vs. Business expenses
Make sure you are honest, yet thorough, in dividing personal and business expenses. Oftentimes they overlap. Keeping good records will help you make that division.
#4: Learn about tax-deductible opportunities
What is tax deductible and what isn’t? The IRS does not provide a direct list of possible deductions, but there are many websites that give lists of suggestions, and of course, you can always meet with a CPA to get more information.
Tip #5:Take it to a professional
Work with an accountant to ensure you are only taking legitimate deductions, while also maximizing them. The accountant will know where you can find hidden deduction opportunities, give you record-keeping ideas, and help you chart your course for the future.
Implementing these tips will help you get off to a strong start on your taxes. Meet with one of our accountants in Coral Springs or an accountant in your area for more tax-time tips.
Andrews June 23rd, 2016
Andrews & Company provides a variety of services for tax preparation in Coral Springs, Florida.
Has tax time been stressful for you in the past? It has for most people. The good news is: it doesn’t have to be!
Most of the stress people feel from filing taxes comes from worrying about making mistakes, leaving out important information, or even meeting deadlines. For others, tax forms may just be simply intimidating. Other business or personal factors can increase the complexity of filing taxes, making filing them more difficult than it used to be, even if you have been filling them out on your own for a long time. Maybe you’ve even received a letter from the IRS in the past telling you that you’ve made a mistake. But by taking your taxes to the professionals, you can eliminate these stressors and be assured that your taxes will be completed on time and accurately.
Why trust tax preparation professionals?
Due to years of specialized training and experience, our Coral Springs accountants are aware of the most common pitfalls tax filers face each year. And although tax preparation websites can be very useful for general filers, if you fall into any of the categories below, it is more likely that important deductions or other key information may be missed or entered incorrectly, even when using a website.
- Major Life Changes – Events like marriage, divorce, having children, or bankruptcy can affect the way you fill out tax forms, and it becomes easier to make mistakes that can delay or prevent you from receiving your returns.
- Filing for a Business – If you are filing taxes for a business, there is much more that must be taken into consideration and the risk of making mistakes increases.
- Self-Employment – If you are self-employed, there may be additional deductions you can take. Missing these deductions can be costlier than paying to hire a professional.
- Investment Assets – If you have a large amount of investment assets, you will want to be sure these are recognized in your tax forms. However, sometimes it’s hard to know what qualifies or where to include them, and this is where having professional assistance could make a big difference.
- Math and Computation Errors – Math is not everyone’s strong suit! And that’s okay. If you’re not confident in ensuring your numbers are correct, a Coral Springs accountant can help you.
Next tax season doesn’t have to be a stressful one—Andrews & Company provides stress-free tax preparation in Coral Springs, Florida, but if you live elsewhere in the United States, you can still enjoy the stress-free tax experience by contacting a trusted accounting firm in your area.
Andrews May 10th, 2016
Posted In: Tax