New Year, New Tax Regulations

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With 2018 in the books, it’s time to start thinking about taxes – and how they’ve changed.

A big one is how tax deductions are handled. If you’re used to itemized deductions, it may make more sense to switch to the standard deduction.

“Standard deductions took a big leap, especially if you’re married filing jointly. It’s almost doubled from $12,000 to $24,000, so that’s a major change,” said Sean LaFortune, tax accounting and services manager for Klein Hall CPAs.

There are a number of other changes as well.

Any divorces finalized after the start of the new year are subject to a revision that makes alimony paid not tax-deductible, and alimony received not-taxable.

Child tax credits are now available for more people – including single parents making up to $200,000 per year, and married couples making up to $400,000, and a portion of the $2,000 per child tax credit is refundable.

“On a refundable credit you can get more money back than you necessarily paid in. And so that could be beneficial for a small business owner who had a bad year and has a loss, has a few dollars paid in, potentially they could get a few dollars back,” said LaFortune.

But with all these changes, it’s important to watch out – a shift in the tax brackets may have reduced how much is being withheld from your paycheck.

If you’ve under withheld and think you may owe money, you can make an estimated payment.

“Form 1040-ES, it’s a coupon, after you do a calculation if you believe you’re going to owe a certain amount, it’s best fill out one of those coupons, put a check in the mail. And at the very least you’ll avoid interest,” said Steven Shamrock, founder of Shamrock Virtual CFO Services.

Of course if you overpay, you’ll get a refund.

This year, taxes are due by Monday, April 15.

Naperville News 17’s Blane Erwin reports.