Tax season is upon us and even if you’ve been preparing for it all year, you may have some questions regarding recent changes as a result of the Tax Cuts and Jobs Act that went into effect in 2017. If you have a family, you can expect changes to some of the aspects of your tax filings, so don’t be taken off-guard when this happens. Staying abreast of the recent tax changes can help you to better prepare, so that you can get the most out of your refund this year. Here’s how new tax changes can impact your family in 2019.
Child Tax Credit Changes
Families with children under the age of 17…this one is for you. Qualifying children under 17 can increase your deduction to $2,000 per child. Keep in mind that your qualifying child will need to meet the requirements of the Child Tax Credit Test in order for your family to be able to take advantage of this credit. Although this credit was nonrefundable in the past, a refundable portion is now available. This portion is equal to 15% of your earned income (over $2,500, up to $1,400).
Personal Exemption & Standard Deduction Changes
Since the Tax Cuts & Jobs Act was passed, personal exemptions were phased out; however, the standard deduction was increased to :
$12,000 for individual filers
$24,000 for married filers
There is also a $500 credit now available for children between the ages of 17 and 24 and also for elderly and disabled filers. These filers will need to meet the qualifications to take advantage of this credit. Speak with your financial professional to see if you qualify for this credit.
Homeowner Deduction Changes
Families who own a home can expect to see a few changes with the way that they file as well. Firstly, state and local tax deductions can only be filed up to $10,000. Secondly, these limitations only correspond to the amount in which you can deduct for interest paid on the mortgage and loan interest. For those who wish to itemize their home deductions, it’s important to keep these changes in mind.
College Savings Changes
Many families start saving for college when their children are young, choosing plans, such as a 529 savings account. In the past, this plan has allowed for only eligible universities to be included; however, recent changes have opened this eligibility up to include any school and grades K-12 as well. Families are able to utilize this plan to pay up to $10,000 per year of expenses that meet the qualifications.
The Importance of Awareness
Each year, families need to be aware of any and all tax changes that can affect them in one way or another. That’s why it’s helpful to have a professional at your side to help you in dealing with these changes properly. Don’t miss out on a credit that you’ve earned, simply because you weren’t aware of it. Enlist the help of a tax professional if you’re finding it challenging to stay current on the ever-changing world of taxes.
The team at Bodine Perry is ready to help your family through tax season! Call (855) 851-8318 or visit www.bodineperry.com to get started!