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5 common tax misconceptions to avoid

Although the legislation has been discussed extensively over the past year, some taxpayers still have misconceptions about the changes.Here are some common but often suspicious beliefs about the new tax code.While many popular deductions have been eliminated, the charity deduction remains. "People confuse charity deduction with the standard deduction going up," said Amy Pirozzolo, Fidelity Charitable's Head of Donor Commitment. It is likely that fewer people will be able to claim beneficial deductions now when the standard deduction has increased. Charitable contributions are still deductible, but only as a specified deduction. To specify, taxpayers need combined specified expenses that are greater than the standard deduction. However, the tax reform doubled the standard deduction, up to $ 1 2,000 from $ 6,000 for single filers, and $ 24,000 from $ 12,700 for married filing jointly. This means that more people will believe the default deduction instead of specifying. "Charity deduction will be used harder to help married couples reach the threshold of $ 24,000," said Bob Falcon, and CPA and Certified Financial Planner with Falcon Wealth Managers. "I'll Probably Enter" While it may have been true in the past, an overwhelming majority of taxpayers will not move on. Approximately 90% of taxpayers are calculated to claim the standard deduction this year according to Turbo Tax. It is 20% more than last year. "The standard deduction increased dramatically from 2017," said Deborah Meyer, a CPA and certified financial planner with WorthyNest. In addition, the amount of possible deductions for specification has been…

Although the legislation has been discussed extensively over the past year, some taxpayers still have misconceptions about the changes.

Here are some common but often suspicious beliefs about the new tax code.

While many popular deductions have been eliminated, the charity deduction remains.

“People confuse charity deduction with the standard deduction going up,” said Amy Pirozzolo, Fidelity Charitable’s Head of Donor Commitment.

It is likely that fewer people will be able to claim beneficial deductions now when the standard deduction has increased.

Charitable contributions are still deductible, but only as a specified deduction. To specify, taxpayers need combined specified expenses that are greater than the standard deduction.

However, the tax reform doubled the standard deduction, up to $ 1

2,000 from $ 6,000 for single filers, and $ 24,000 from $ 12,700 for married filing jointly. This means that more people will believe the default deduction instead of specifying.

“Charity deduction will be used harder to help married couples reach the threshold of $ 24,000,” said Bob Falcon, and CPA and Certified Financial Planner with Falcon Wealth Managers.

“I’ll Probably Enter”

While it may have been true in the past, an overwhelming majority of taxpayers will not move on.

Approximately 90% of taxpayers are calculated to claim the standard deduction this year according to Turbo Tax. It is 20% more than last year.

“The standard deduction increased dramatically from 2017,” said Deborah Meyer, a CPA and certified financial planner with WorthyNest.

In addition, the amount of possible deductions for specification has been sharply reduced. “The government, local and property tax deductions are limited to $ 10,000 for the tax year 2018. You could have considered unlimited state, local and property taxes if you were to specify other installments,” says Meyer.

Interest-rate capital (HELOCs) interest rates were previously deductible, as well as interest rates on mortgages up to $ 1 million. Now, interest-rate deductions for primary and secondary housing only apply to loans below $ 750,000. And taxpayers can no longer deduct interest on HELOCs used to pay staff costs (such as student loans and credit card debt).

Although healthcare costs exceeding 7.5% of revenue are deductible if you specify in 2018, it will only affect a very small proportion of people.

“With the improved standard deduction and the deduction of deductible taxes, it is more likely that you claim a standard deduction 2018,” says Meyer. “Families with large mortgages and or significant charity contributions can still specify, but it will be case by case.”

To better understand where your personal situation can fit, TurboTax has a free standard vs. specified deduction tool.

“I’ll pay more in taxes because I can no longer claim personal exceptions.”

Yes, the tax reform has eliminated the personal exception. But in addition to the standard deduction increase, the child tax card has increased and more of it is repaid. The income protection fund for child benefit credit was also raised to include more people.

“Fortunately, because the standard deduction has doubled, this change does not affect married couples with children,” said Justin Chidester, a certified financial planner and owner of Wealth Mode Financial Planning.

He says that since Child Tax Credit has doubled to $ 2,000 per child and income limit rate payments have been increased up to $ 200,000 for single filers and $ 400,000 for joint filers, most with children will see a decrease of paid taxes, not an increase.

“I do not need a tax secretary”

If there was one year to check in with a tax secretary, this may be the year because this is the first year of tax reform.

“I see more people who need the help of a professional this year,” says Kate Welker, a certified financial planner with Irvine Wealth Planning Strategies.

Of course, the advantage of the overwhelming majority of taxpayers takes the standard deduction that their return comes to be less involved, says Lisa Greene-Lewis, CPA and tax expert on TurboTax.

“If you have never tried to do it yourself, try it,” says Greene-Lewis. “We have CPAs available that can overlook your shoulder, so you can get the assurance you need by connecting live with them.”

“My refund will be higher”

Do not hold your breath for a major refund. Even if you owe less in taxes you may already have received the money.

“Many individuals I’ve forecast for will have a lower tax debt than in previous years, but that does not always mean a higher repayment,” says Welker.

Tax deduction tables have been amended to incorporate the new tax act. It may have changed the amount retained from each paycheck and taxpayers may have received more each term throughout the year.

“I recommend everyone to take a look at their paycheck and make sure it’s sensible,” said Welker. “IRS has a source calculator that goes through the variables you would like to consider when you fill in a W4.” [19659032]
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