By Samantha Bomkamp
WWR Article Summary (tl;dr) Getting ready to file your taxes? Here’s a quick run-down on a few do’s and dont’s to keep in mind this year.
Confused about how the new tax law will affect you? You’re not alone.
With the ink barely dry on a new tax law, uncertainty abounds on what moves to make or even what to ask a tax preparer. So what do you need to know before you collect that box of receipts and make the trip to see your accountant?
Here’s a rundown of the important things to note this tax season, including what the new tax law will (and will not) mean for you:
CHANGE HAS NOT COME QUITE YET.
Many people may assume that with the December passage of the tax reform bill, the changes are taking effect with the forms they’re filing out over the next few months, said David Marzahl, president of the Center for Economic Progress, a Chicago nonprofit which provides free tax services for low-income individuals and families. But the 500-page law mostly affects taxes starting in 2018, not what’s owed for 2017.
“People need to move very cautiously as they prepare their 2017 tax returns and not be swayed by all the messaging,” Marzahl said.
Marzahl recommends that filers think about their 2017 returns and the tax reform changes in two separate steps: First, file your taxes with deductions you took last year, as long as nothing major has changed, like a marriage or a new baby. Once that’s done, he said, ask your tax preparer about what you can adjust to be fully prepared for the changes to come.
While there were a few things that taxpayers could do before 2017 ended to maximize deductions, like pay estimated property taxes for 2018 and increase charitable donations, there is one adjustment that some people can still take advantage of: a retroactive lowering of the threshold for medical bill deductions. For 2017, if you paid more than 7.5 percent of your income in medical bills, you can deduct those from your taxes. That’s down from a previous threshold of 10 percent.