Tax Reform Tax Reform 101: 5 Things To Do Now Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxLisa Published Dec 6, 2019 4 min read Even if you didn’t owe money this past tax season, it’s more important than ever to get ready for the upcoming tax season now. With so many changes under the new tax reform law, we wanted to break down five big changes and the moves you can make now to help you save money when you file your 2019 taxes (the ones you file in 2020). Lower tax rates, more money. One of the biggest changes under the new tax law that may impact how much you need to have withheld from your paycheck is the reduced tax rates. Tax rates were reduced about 1 – 4% for the majority of taxpayers so you may be seeing more money in your paycheck. Although the IRS adjusted the withholding tables that employers use to produce the correct amount of tax withholding for people with simpler tax situations, for instance, those who only take the standard deduction, the withholding tables don’t reflect some of the other changes that impact more involved tax returns like the reduction of some itemized deductions. To make sure you give your employer the right W-4 withholding allowances to boost your tax refund — or your take-home pay you can use the updated TurboTax W-4 calculator. Elimination of personal and dependent exemptions. Under tax reform, the personal and dependent exemption was eliminated. If you are married and have a few kids, the elimination of your personal and dependent exemptions can mean a reduction in the number of write-offs you once had. Increase in the Child Tax Credit. Although you’re no longer able to take the dependent deduction, under tax reform, the Child Tax Credit increased from $1,000 to $2,000 per child. The law also adds a new, non-refundable credit of $500 called the Other Dependent Credit (OCD) for dependents other than children. Finally, it raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000, which means more people will be eligible for the tax credit. Because the Child Tax Credit is for kids under 17, if your not so little one celebrated their seventeenth birthday this year, you may see a change in your taxes, since you can no longer take the Child Tax Credit for your 17-year-old. You can, however, take advantage of the new Other Dependent Credit of $500 if your child is 17 or older. Changes if you’re a homeowner. If you are a homeowner or are considering buying your dream home, some of the changes in the tax law are very important for you. As an existing homeowner, you may see fewer tax deductions that lower the taxes you owe especially if you live in a state with high property taxes — since the law limits the amount of state and local property and state income or sales taxes that can be deducted to $10,000. In the past, these taxes have generally been fully tax-deductible. Due to the cap on these tax deductions, you may now also have to take the standard deduction on your taxes instead of taking itemized deductions since the standard deduction has almost doubled. Don’t worry about knowing if you should take the standard deduction or itemize your tax deductions at tax time. TurboTax will ask you simple questions about you and give you the option (standard deduction or itemized) that you’re eligible for based on your entries. If you are considering purchasing a new home this year, one thing to keep in mind is the law also caps the amount of mortgage indebtedness on new home purchases on which interest can be deducted at $750,000, down from $1,000,000 for homes purchased prior to December 15, 2017. If you are trying to make a decision between purchasing in a high property state like California or a state with lower property prices, knowing about these changes could help you with your decision. Elimination of tax deductions. Tax reform eliminated several popular tax breaks like miscellaneous itemized deductions. This includes deductions such as job search expenses, unreimbursed work expenses, investment expenses and tax preparation fees, exceeding 2% of adjusted gross income as well as the elimination of moving expenses unless you are active-duty military. What Can You Do Now? Adjust your withholding allowances. One of the best things you can do is to use the TurboTax updated W-4 calculator to boost your tax refund — or your take-home pay. See where you stand. You can also use TurboTax TaxCaster to see how the new tax law impacts you. TurboTax TaxCaster will give you a side by side comparison of how tax reform impacts you based on your specific situation. Reduce your taxable income. You can decrease your taxable income by making smart money moves throughout the year like investing in your 401K or IRA. Also, don’t forget expenses like paying student loan interest can be tax-deductible and will decrease your taxable income at tax time. Don’t worry about knowing the tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your answers. If you have tax questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average 15 years experience to get your tax questions answered at tax-time. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return. Previous Post What is an Able Account? (Contributions & Rules Explained) Next Post Life Changing Events Explained (IRS Qualifying Life Events) Written by Lisa Greene-Lewis Lisa has over 20 years of experience in tax preparation. Her success is attributed to being able to interpret tax laws and help clients better understand them. She has held positions as a public auditor, controller, and operations manager. Lisa has appeared on the Steve Harvey Show, the Ellen Show, and major news broadcast to break down tax laws and help taxpayers understand what tax laws mean to them. For Lisa, getting timely and accurate information out to taxpayers to help them keep more of their money is paramount. More from Lisa Greene-Lewis Follow Lisa Greene-Lewis on Twitter. 102 responses to “Tax Reform 101: 5 Things To Do Now” « Older Comments Hi Lisa. I’m self-employed (interior designer working from home). I see TurboTax didn’t file a Schedule SE for me in 2018, and was that because I had a loss? I read on the IRS website that I should file this form, even if I have a loss. This basically means I’m not paying into SS for retirement, correct? Should I file an amended return? Thanks so much! Reply Hi Katherine, The Schedule SE is generated when there are “Net Earnings” from Self Employment. Since you had a loss there were no calculations or SE Tax to report. An amended return is not necessary unless you choose the “optional method” of calculating your self employment income. Per the IRS’ “The optional method may give you credit toward your social security coverage even though you have a loss or a small amount of income from self employment. However, using this method may also increase your SE tax.” Thank you Reply Instead of using TurboTax Deluxe, you must use TurboTax for business now if you are self employed but you can claim your business related expenses using it. This is due to the new tax laws. I found that out when preparing my taxes for 2018. It was not allowing expenses against my 1099 income on the TurboTax Deluxe program so I upgraded in the middle of preparation. Hi Kathyrn, TurboTax has various products to assist in your tax preparation needs. Self-Employed taxpayers should use TurboTax Self-Employed because the program is specifically for your unique tax situation. TurboTax Self-Employed helps automatically find industry-specific business deductions. Also, if you already use QuickBooks Self-Employed to track your income, expenses, mileage, capture your receipts; your information can then be easily exported to TurboTax Self-Employed at tax-time. Thank you When can I start working on my 2019 tax in Tax Caster? Reply i did not file for a few years because of 1) not being able to find the right tax preparer! while I am always at work to make ends meet because I must help my adult son age 33 who was injured in an accident been working on and off even before that! now he is back to work but I still help him to pay bills plus mine because of hi insufficient pay! I also have a student loan that the private school took even though they knew I was not in their school! at that same time they took the check I took entrance test and was attending NYTC, the loan is in default so $106 is taken from my social security I am receiving from my deceased ex husband I because i did take his ss benefit leaving mine until I retire! ok also as I file the refund may be taken by IRS because of that fraudulent school? so what can I do? please help me know what to do I really need to file my taxes. thank you. Reply I used turbo tax to file my 2017 taxes but can’t remember how to get into that account and I need last years aig to efile how do I get my last years aig from turbo tax? Reply Why did Trubo tax file a 2210 form when I over paid my taxes by $2,872 using withholding and timely estimated deposits and now tell me I made a mistake on my return and not telling where? Reply Can a young adult with a 1095a for heath insurance use turbo tax? Reply Is mortgage insurance deductible in 2018? The website says its “under review”? Reply FORM 2106 IS STILL IN TurboTax. Why? You no longer can deduct employee business expenses, correct? Reply my husband and I are both paying on our student loans, when I entered the interest this year we didn’t receive any credit and it was a substantial amount? can you explain why? Reply Thank you so much Lisa you have answered all the questions I didn’t even asked like I’m 68 years old we have big donations to our church and local charities also however I was just wondering how should we file my husband is an independent contractor a food Currier, however I’m retired collecting social security and my little pension???? Should we try to file married but file separately or should we still file jointly like we did before to maximize our deductions? Reply What is the standard deduction for couple filing jointly for our 2018 tax? Reply If you itemize instead of taking the standard deduction …do you get a marriage filed jointly deduction in addition to medical , charitable, mortgage interest, etc.? Reply My Mother became very ill in April and she quit claimed her home to me so I could easily sell it for her. All the proceeds were given to her after sale. She and her husband who has Parkinson’s now live with me. How do I avoid paying gift and capital gains on a property I only sold but never received any compensation for. Reply Is there a maximum for charitable contributions Reply Hi;I know it’s the end of the year 2018 however I wanna file my taxes for 2017 I was told it’ll be free. Is it to late for me to file free, because all I’m seeing is premier or deluxe? Reply We are filing married & jointly. Our son is not under 17, but we are paying college tuition & board for him. We have income from savings bonds we redeemed, but all of the money went toward our son’s tuition. Are we restricted to the standard deduction? Reply Can i file using Turbo Tax program if i need to file a schedule D? Reply How does the new tax law affect landlords? Can you still deduct travel expenses related to purchasing rental real estate? Reply Will still be able to clsim the child tax credit for my high school senior who lives at home and who will turn 18 December 20th? Reply If I sell part of my land, how will that affect my taxes Reply Is the turbo tax program for tax year available to be downloaded now? I would like to do some proforma calculations prior to year end Thanks Reply DO I HAVE TO FILE IF I DON’T HAVE ANY FED TAX WITHDRAWN??? MY I.R.A. ENDED LAST YEAR & WAS THE ONLY THING FED.TAX DEDUCTIBLE. DO YOU HAVE TO FILE IN THIS CASE.???? Reply I have asked this question twice before, but TurboTax has not or cannot answer. If the answer is known, please reply with the answer to my email address as well as posting on your website. Under the 2017 Form 1040, Item 39a, retired folks over 65 years of age could get an additional tax credit (exemption) because of age and still another if a person is legally blind. Have these tax credits been eliminated? If so, does that mean folks over 65 years of age are now considered the same as members of the work force who receive a weekly or monthly paycheck? Please advise. Reply Hi Robert, Yes you still get the additional deductions for being 65 and over or legally blind. Thank you, Lisa Greene-Lewis Reply My income includes social security retirement, FERS pension, and rent from my previous home. Total of about 65,000. The rental amount goes to pay the mortgage until I sell the home which needs repairs. Will I have to pay the IRS next year? Reply I’m a trucker and usually have about 300 days a year on the road. Do we still get the meal allowance? Randy Aiello Reply how does the new tax law efect a retired single person with a minimal income in addition to SS#? Can you still itemize donations in kind (goods) to charaties. What ar imits if any? Reply Hi, You can still itemize if your deductions are more than the standard deduction ($12,000 single and $24,000 married filing jointly) Plus you get an additional deduction if you are 65 or over or legally blind. If your deductions are under the standard deduction amounts you will take the standard deduction. If they are over that amount you can still itemize and also claim your donations to charity. Here is our quick free interactive tool to help you estimate https://blog-turbotax-intuit-com-develop.go-vip.co/uncategorized/does-tax-reform-impact-how-i-claim-standard-vs-itemized-deductions-41902/ TurboTax will also be up to date with the latest tax laws and will figure out whether you benefit from taking the standard deduction or itemizing based on your entries. Best, Lisa Greene-Lewis Reply What is considered poverty level earning? How much can I make without paying taxes? Reply If I always filed as self employed using my SSN and have used my home for business, deducted a percentage of the utilities and rent for business and have other business expenses, will I be able to continue to do that without becoming an LLC? Also, if I must be an LLC is it too late to make it retroactive for the beginning of 2018. I’ve been hearing we will not be able to claim any expenses against 1099 income beginning 2018. Please let me know ASAP. Reply I sold real estate with an estimated profit of $72000; I have minimal earned income and am single. I don’t know how to estimate potential liability to avoid penalty. Reply Hi Lisa, I took deferred retirement that mean I would not collect my pension until when I turn 60. So I took $100,000 out of my TSP but I received 80,000 ( $20,000 was deducted as tax). I am using this money for next 3 years until my pension kick in. My wife is still working full time and part time student. Question: 1) Should we continue to file as joint or single for coming year since dependent does not count according to new tax law? 2) Do i have to worry about $20,000 tax I paid is enough? 3) Also I have cosigned two children student loans but they could not afford to pay them. So I am using my TSP money I took out, paying for the student loan principal and interest? Can I claim this on my next year tax return? Thanks in advance. Reply I sold a piece of vacant land that is free and clear, but the purchaser is paying for it ($35,000) over a period of 4 years. The legal person who drew up the contract has already sent me a 1099 form saying I have to declare the total money on this year’s taxes even though I have not received that money. I am only receiving $665 each month until 2022. Why do I have to declare the entire amount now, when I did not get the whole purchase amount? Reply Can i still file my 2017 tax return? And do you have any changes on filling? Reply I had a summer job in a town different to the one I am in now. That job had the old address how will I get my w-2 from that job. Reply Charitable contributions, can they be itemized as a deduction? Reply When will lthe TurboTax 2019 Software be available for purchase? Reply I cannot find any of my passwords or user names from previous years. How do I file online with direct deposit return? Reply I saved the work file in my flash drive & deleted it from the hard drive . I can see the file name & size in the saved files in my flash drive, but can not open it. Then I moved the file back to hard drive, I am still unable to open it. Please help. Thanks. Reply I heard on the news that I no longer had to clean my alimony as income and that my ex-husband can along or deduct that from his taxes. I want to make sure this is true? 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Hi Lisa. I’m self-employed (interior designer working from home). I see TurboTax didn’t file a Schedule SE for me in 2018, and was that because I had a loss? I read on the IRS website that I should file this form, even if I have a loss. This basically means I’m not paying into SS for retirement, correct? Should I file an amended return? Thanks so much! Reply
Hi Katherine, The Schedule SE is generated when there are “Net Earnings” from Self Employment. Since you had a loss there were no calculations or SE Tax to report. An amended return is not necessary unless you choose the “optional method” of calculating your self employment income. Per the IRS’ “The optional method may give you credit toward your social security coverage even though you have a loss or a small amount of income from self employment. However, using this method may also increase your SE tax.” Thank you Reply
Instead of using TurboTax Deluxe, you must use TurboTax for business now if you are self employed but you can claim your business related expenses using it. This is due to the new tax laws. I found that out when preparing my taxes for 2018. It was not allowing expenses against my 1099 income on the TurboTax Deluxe program so I upgraded in the middle of preparation.
Hi Kathyrn, TurboTax has various products to assist in your tax preparation needs. Self-Employed taxpayers should use TurboTax Self-Employed because the program is specifically for your unique tax situation. TurboTax Self-Employed helps automatically find industry-specific business deductions. Also, if you already use QuickBooks Self-Employed to track your income, expenses, mileage, capture your receipts; your information can then be easily exported to TurboTax Self-Employed at tax-time. Thank you
i did not file for a few years because of 1) not being able to find the right tax preparer! while I am always at work to make ends meet because I must help my adult son age 33 who was injured in an accident been working on and off even before that! now he is back to work but I still help him to pay bills plus mine because of hi insufficient pay! I also have a student loan that the private school took even though they knew I was not in their school! at that same time they took the check I took entrance test and was attending NYTC, the loan is in default so $106 is taken from my social security I am receiving from my deceased ex husband I because i did take his ss benefit leaving mine until I retire! ok also as I file the refund may be taken by IRS because of that fraudulent school? so what can I do? please help me know what to do I really need to file my taxes. thank you. Reply
I used turbo tax to file my 2017 taxes but can’t remember how to get into that account and I need last years aig to efile how do I get my last years aig from turbo tax? Reply
Why did Trubo tax file a 2210 form when I over paid my taxes by $2,872 using withholding and timely estimated deposits and now tell me I made a mistake on my return and not telling where? Reply
FORM 2106 IS STILL IN TurboTax. Why? You no longer can deduct employee business expenses, correct? Reply
my husband and I are both paying on our student loans, when I entered the interest this year we didn’t receive any credit and it was a substantial amount? can you explain why? Reply
Thank you so much Lisa you have answered all the questions I didn’t even asked like I’m 68 years old we have big donations to our church and local charities also however I was just wondering how should we file my husband is an independent contractor a food Currier, however I’m retired collecting social security and my little pension???? Should we try to file married but file separately or should we still file jointly like we did before to maximize our deductions? Reply
If you itemize instead of taking the standard deduction …do you get a marriage filed jointly deduction in addition to medical , charitable, mortgage interest, etc.? Reply
My Mother became very ill in April and she quit claimed her home to me so I could easily sell it for her. All the proceeds were given to her after sale. She and her husband who has Parkinson’s now live with me. How do I avoid paying gift and capital gains on a property I only sold but never received any compensation for. Reply
Hi;I know it’s the end of the year 2018 however I wanna file my taxes for 2017 I was told it’ll be free. Is it to late for me to file free, because all I’m seeing is premier or deluxe? Reply
We are filing married & jointly. Our son is not under 17, but we are paying college tuition & board for him. We have income from savings bonds we redeemed, but all of the money went toward our son’s tuition. Are we restricted to the standard deduction? Reply
How does the new tax law affect landlords? Can you still deduct travel expenses related to purchasing rental real estate? Reply
Will still be able to clsim the child tax credit for my high school senior who lives at home and who will turn 18 December 20th? Reply
Is the turbo tax program for tax year available to be downloaded now? I would like to do some proforma calculations prior to year end Thanks Reply
DO I HAVE TO FILE IF I DON’T HAVE ANY FED TAX WITHDRAWN??? MY I.R.A. ENDED LAST YEAR & WAS THE ONLY THING FED.TAX DEDUCTIBLE. DO YOU HAVE TO FILE IN THIS CASE.???? Reply
I have asked this question twice before, but TurboTax has not or cannot answer. If the answer is known, please reply with the answer to my email address as well as posting on your website. Under the 2017 Form 1040, Item 39a, retired folks over 65 years of age could get an additional tax credit (exemption) because of age and still another if a person is legally blind. Have these tax credits been eliminated? If so, does that mean folks over 65 years of age are now considered the same as members of the work force who receive a weekly or monthly paycheck? Please advise. Reply
Hi Robert, Yes you still get the additional deductions for being 65 and over or legally blind. Thank you, Lisa Greene-Lewis Reply
My income includes social security retirement, FERS pension, and rent from my previous home. Total of about 65,000. The rental amount goes to pay the mortgage until I sell the home which needs repairs. Will I have to pay the IRS next year? Reply
I’m a trucker and usually have about 300 days a year on the road. Do we still get the meal allowance? Randy Aiello Reply
how does the new tax law efect a retired single person with a minimal income in addition to SS#? Can you still itemize donations in kind (goods) to charaties. What ar imits if any? Reply
Hi, You can still itemize if your deductions are more than the standard deduction ($12,000 single and $24,000 married filing jointly) Plus you get an additional deduction if you are 65 or over or legally blind. If your deductions are under the standard deduction amounts you will take the standard deduction. If they are over that amount you can still itemize and also claim your donations to charity. Here is our quick free interactive tool to help you estimate https://blog-turbotax-intuit-com-develop.go-vip.co/uncategorized/does-tax-reform-impact-how-i-claim-standard-vs-itemized-deductions-41902/ TurboTax will also be up to date with the latest tax laws and will figure out whether you benefit from taking the standard deduction or itemizing based on your entries. Best, Lisa Greene-Lewis Reply
If I always filed as self employed using my SSN and have used my home for business, deducted a percentage of the utilities and rent for business and have other business expenses, will I be able to continue to do that without becoming an LLC? Also, if I must be an LLC is it too late to make it retroactive for the beginning of 2018. I’ve been hearing we will not be able to claim any expenses against 1099 income beginning 2018. Please let me know ASAP. Reply
I sold real estate with an estimated profit of $72000; I have minimal earned income and am single. I don’t know how to estimate potential liability to avoid penalty. Reply
Hi Lisa, I took deferred retirement that mean I would not collect my pension until when I turn 60. So I took $100,000 out of my TSP but I received 80,000 ( $20,000 was deducted as tax). I am using this money for next 3 years until my pension kick in. My wife is still working full time and part time student. Question: 1) Should we continue to file as joint or single for coming year since dependent does not count according to new tax law? 2) Do i have to worry about $20,000 tax I paid is enough? 3) Also I have cosigned two children student loans but they could not afford to pay them. So I am using my TSP money I took out, paying for the student loan principal and interest? Can I claim this on my next year tax return? Thanks in advance. Reply
I sold a piece of vacant land that is free and clear, but the purchaser is paying for it ($35,000) over a period of 4 years. The legal person who drew up the contract has already sent me a 1099 form saying I have to declare the total money on this year’s taxes even though I have not received that money. I am only receiving $665 each month until 2022. Why do I have to declare the entire amount now, when I did not get the whole purchase amount? Reply
I had a summer job in a town different to the one I am in now. That job had the old address how will I get my w-2 from that job. Reply
I cannot find any of my passwords or user names from previous years. How do I file online with direct deposit return? Reply
I saved the work file in my flash drive & deleted it from the hard drive . I can see the file name & size in the saved files in my flash drive, but can not open it. Then I moved the file back to hard drive, I am still unable to open it. Please help. Thanks. Reply
I heard on the news that I no longer had to clean my alimony as income and that my ex-husband can along or deduct that from his taxes. I want to make sure this is true? Reply