Jackson Hewitt Tax Pros Explain How Tax Reform Will Impact You
With daily headlines about tax reform, taxpayers across the nation are wondering if the Tax Cuts and Jobs Act will affect their tax liability for the 2017 tax year and what changes to expect in 2018. Although Jackson Hewitt advises that every taxpayer is likely to be impacted by tax reform, a recent study conducted by the tax services company found that only 40% of respondents believe tax reform will impact their taxes.
These changes may not only reduce or increase taxes owed for years beginning in 2018, but they could also have an impact that working Americans will notice more immediately. Jackson Hewitt notes the changes that will affect the vast majority of Americans, below:
Your paycheck may change. The new tax brackets and tax rates have resulted in new withholding tables, meaning you could see an increase or decrease in your take-home pay starting early in 2018. The rates are generally lower and the brackets are slightly broader so the majority of taxpayers will pay less in tax.
Personal or dependent exemptions are gone. Personal exemptions were $4,050 per taxpayer, spouse and qualifying dependent in 2017. These exemptions have been removed for the 2018 tax year, meaning more of these taxpayers’ income is subject to taxation.
The standard deduction has almost doubled. What you might have lost in exemptions could be made up with this significant increase to the standard deduction. In 2017, the standard deduction for single people was $6,300 and $12,600 for married couples filing jointly. The new deductions are $12,000 and $24,000, respectively.
Taxpayers who itemize deductions may now deduct qualifying medical expenses that exceed 7.5 percent of their adjusted gross income, retroactively for the 2017 tax year and moving forward into 2018. This change allows qualified taxpayers to deduct more medical expenses since the old law only counted qualifying medical expenses that exceeded 10 percent of your adjusted gross income.
There are no more business expense deductions. If you have been a remote employee who deducted a home office, travel, or other items, you’ve lost a large deduction.
“It’s likely that several of these changes will impact many taxpayers,” said Steber. “Since each person has a unique tax situation, you can’t know if the person will pay more or less in taxes until you look at the whole picture. Since a tax refund can feel like the biggest paycheck of the year for some, we recommend talking to your tax pro to plan for these changes.”
To schedule an appointment with a Jackson Hewitt tax pro, go to www.jacksonhewitt.com/OfficeLocator/