Tax expert: Don't delay in filing
By Chris Day
Monday, February 4, 2019
More than a year ago Congress passed the Tax Cuts and Jobs Act of 2017, which at the time was touted as the largest tax overhaul in 30 years. The complex piece of legislation is filled with changes that could affect taxpayers in different ways than before.
That’s why one local tax expert recommends residents file their tax returns as early as possible ahead of the April 15 filing deadline.
“People are really confused,” said Frank Brewer, of the new tax code. Brewer is the business operations manager for several H&R Block locations in North Carolina and Virginia, including the 515 W. Ehringhaus St. location.
While the new tax legislation was passed in 2017, this year marks the first year people will file their taxes under the new rules.
Among the key changes in the tax law are increases in standard deductions, which for individual taxpayers increased from $6,350 in 2017 to $12,000 in 2018. The standard deduction for married couples doubled from $12,700 to $24,000 in 2018. However, any benefits from the increase in standard deductions could be offset by the elimination of personal exemptions. Prior to 2018 taxpayers could subtract $4,050 from their taxable income for each dependent they claimed. For a large family the personal exemptions could add up to significant deductions, Brewer explained. That’s no longer the case.
“Your (taxable) income may not be reduced as much as a result of that,” he said. Changes such as those are why Brewer recommends people don’t delay in filing their taxes.
“It’s important that you go ahead and file,” Brewer said.
Another reason to file early is because some people may learn they actually owe the IRS money this year. That’s because changes in the withholding tables under the new tax code means some people are having less in taxes withheld from their paychecks.
“I would not wait,” Brewer cautioned. “Because of the changes it may put those people in the position of owing.”
People who typically break even on their refunds or receive only a small amount could owe this year, he explained. By filing early, people who owe will have more time to pay their taxes or make make payment arrangments with the IRS, Brewer said.
Some business owners may benefit from the new changes, according to Brewer. That’s because owners can now claim a 20-percent deduction on their “pass-through” or qualified business income. Pass-through income is passed to the owners and taxed at the individual level, Brewer explained.
“They will definitely benefit from that,” Brewer said.
Also in 2018 the Child Tax Credit increased from $1,000 in 2017 to $2,000 for each child under the age of 17.
Workers who could be negatively affected by the tax changes are those whose employers pay them using IRS form W2, Brewer said. That’s because in the past workers could claim certain unreimbursed business expenses, such as hospital scrubs for nurses and tax preparation fees. In 2018 those kinds of miscellaneous reductions were eliminated.
“Truck drivers are going to be impacted more than any other occupation,” Brewer said. “Truck drivers are going to be really hit.”
Under the changes, truck drivers will no longer be able to deduct unreimbursed business expenses like meals, laundry services and other related expenses.
It typically takes about 21 days for the IRS to pay out a refund, Brewer said, adding he highly recommends people file their taxes electronically.
“I’m still surprised by the number of people who mail in their tax returns,” he said.
Filing electronically can help reduce the chances of mistakes on a return. That’s because when a hard copy return is mailed in, someone at the IRS has to manually enter that information into a computer, which could lead to a mistake in the information being entered. Electronically filing is huge in ensuring a refund is received as quickly as possible, he said.
Taxpayers often think of taxes as a once-a-year occurrence, when in fact they should be thinking about their taxes differently, Brewer said.
“They should be thinking about that year round,” he said.