Jill on Money: Getting started on your 2018 taxes
Although the government was shut down for most of January, the 29th marked opening day for tax season.
The IRS has said all deadlines remain in place, except for those victims of federally declared disaster areas. The agency has said that even with a reduced number of workers, refunds should be processed within the traditional 21-day period for e-filers and six weeks for paper filers. (As a note, if you claim the Earned Income Tax Credit or Additional Child Tax Credit, the IRS cannot issue refunds before mid-February.)
That said, there could be delays as the agency gets back to full speed, so don't be surprised if you don't see your refund right away.
The filing deadline is April 15, though due to local holidays, residents of Maine and Massachusetts have until April 16 and those in the District of Columbia can file as late as April 17. Because this is the first tax year of the Tax Cuts and Jobs Act, there's bound to be a lot of confusion.
The IRS recognizes that fact and is providing some leeway by waiving the estimated tax penalty for many who withheld their estimated tax payments for the year. If you paid at least 85 percent of your total liability through federal income tax withholding, quarterly estimated tax payments or a combination of the two, you are fine. (The usual percentage threshold is 90 percent to avoid a penalty.)
So where should you start?
The IRS advises using tax preparation software, because it is the best and simplest way to file a complete and accurate return. The software guides you through the process and, more important, does the math for you, which is often where the errors most commonly occur.
Electronic filing options include IRS Free File for those with incomes of $66,000 or less, Free File Fillable Forms for all taxpayers, commercial software (Turbo Tax, H & R Block, TaxAct) and individual professional assistance, which is best for those with complicated situations.
There are two additional resources, which bear noting: the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly. These organizations provide free tax help to people who generally make $54,000 or less, persons with disabilities and limited English-speaking taxpayers who need assistance. Once you file, check out the Where's My Refund? tool on IRS.gov and the IRS2Go phone app.
To help you navigate the new tax code, your friends at the IRS have compiled Tax Reform Basics. Of course, it is the IRS, so "basic" is still 14 pages.
Here is a cheat sheet, to remind you what has changed:
Standard deduction: $12,000 for Individuals, $24,000 for married filing jointly and $18,000 for head of household.
Personal exemptions: Gone.
Schedule A (Itemized Deductions):
•Limit on overall itemized deductions suspended.
•Deduction for medical and dental expenses: Must exceed 7.5 percent of your 2018 adjusted gross income (returns to 10 percent in 2019).
•Deduction for state and local income, sales and property taxes: Limited to a combined total of $10,000 ($5,000 if married filing separately).
•Mortgage interest deduction: Home acquisition debt acquired after Dec. 15, 2017, is limited to a total of $750,000 or less ($375,000 or less if married filing separately).
