The Tax Cuts and Jobs Act could impact how you file your income tax return.
CPA Jamie Block of the New York State Society of CPAs discussed some of the changes resulting from the new tax law, including to the Form 1040 used to file your individual income tax return before the April 15 deadline.
“They wanted to simplify things, so they’re going to have a ‘post card’ sized form and it’s going to eliminate the 1040-A and the 1040-EZ, but don’t be surprised if you don’t actually receive a post card because most CPAs are still going to print it out on 8-1/2 by 11 pieces of paper,” Block said.
The major change from last year will be the bump taxpayers see with their standard deduction. For individual filers, it’s now $12,000. For head of household filers it’s $18,000. For married filing jointly it’s $24,000. This will elimiate the need to itemize deductions for many on their federal return, but not necessarily on their state return. “It really depends on your individual circumstances,” Block said. “So, the big changes are – for New York State taxpayers especially – that they limited the state income taxes and real estate taxes, the total, to $10,000. You still get to deduct your charitable donations and your home mortgage interest – but some nuance changes there – and then the other big change is that they totally eliminated the two percent miscellaneous itemized deductions such as tax preparation fees, advisor fees, unreimbursed employee expenses and the like.”
When it comes to tax credits, there’s good news for people with eligible children. “The good news is for people with children is they raised the Child Tax Credit from $1,000 to $2,000 and they also increased the limit for Adjusted Gross Income, so if you’re higher in your income you still may be able to take those credits when you haven’t in the past,” said Block. She added, “So one big thing is for large families that have many children, they’re going to get hurt because they eliminated the exemption – which is about $4,000 – for you, your spouse and then each child. So again, large families get hurt by this.”
If this seems like a lot to digest, Block recommends working with a CPA to assist with your tax needs. For more information, visit the New York State Society of CPAs website, nysscpa.org/getmoneysmart.