Set aside more time to do your taxes

WORLAND - Doing taxes this year could cause many taxpayers a lot of frustration and is estimated to take about 20 percent longer than in previous years because of the changes in tax laws.

While many people take their taxes to an accountant, others decide to bite the bullet and do their own taxes to save a few bucks. This year it might not be worth saving a few bucks with all the changes to the tax laws. At first the new tax laws appear to have simplified the process but according to Worland’s SBW and Associates CPA (Certified Public Accountant) Gary Wantulok tax time just got a lot more complicated. “I don’t think they have really simplified a whole lot especially in business returns. I think it has gotten a little more complicated but it kind of depends,” Wantulok said. “All the things that I have been to and seen, it’s actually going to take longer, especially if you have a small business because of some of their changes. That’s just across everything. Even when you do your own taxes, it’s going to take longer because you are going to go through new things and try to figure it out,” he added.

One of the biggest changes to the yearly tax filing is the change to the standard deductions and personal exemptions. “There will be probably less people that itemize. That’s just because of the increase in the standard deduction. There are no more personal exemptions but they also about doubled the standard deductions,” Wantulok said. “People that would benefit a lot are older people that maybe have a standard deduction now their deduction is quite a bit more even though they lost their exemptions. Usually that’s a couple thousand dollars generally speaking in their favor that they will get extra,” he added.

While personal exemptions are a thing of the past, taxpayers with children can take heart in the fact that the child tax credit has doubled. Wantulok stated that the child tax credit went from $1,000 per child under the age of 17 to $2,000 per child. “So that actually is more advantageous because that’s a credit versus a deduction,” he said.

The earned income tax credit has also changed with a slightly higher income allowed to take the credit. In 2017 the income required to get maximum credit for a family with one child was $10,000 versus in 2018 it is $10,200.

Unfortunately, people who spent money out of pocket for work-related expenses that didn’t get reimbursed by their employer can no longer claim those expenses. “So a lot of people that did itemize, say they didn’t get reimbursed by their employer, they could qualify for itemize deduction a lot of stuff that came out of their pocket. They are not going to get that. So that is one thing that’s not good,” Wantulok said.

Most people have seen additional money in their paychecks due to the adjusting down of the withholding tables. That adjusting means that less money has been taken out which could in turn cause many taxpayers to see much smaller returns.

Wantulok said that the biggest tax savings is in the tax rates. The 2018 Federal income tax has seven rates: 10, 12, 22, 24, 32, 35 and 37 percent. The 2017 Federal income tax rates were: 10, 15, 28, 33, 35 and 39 percent. “If you look very generally speaking, a lot of those rates, people are saving about 3 percent. So if they were in the 15 percent tax bracket, for example, is right around that 12 percent. So that is where a lot of the big tax savings is. You would have to look at your filing status, your income to see exactly where you fit but very generally speaking about three percent that it went down,” Wantulok explained.

State and local sales, property and income tax deduction is limited to $10,000 in total.

Property capital gains stayed the same. “Taxpayers may continue to exclude from gross income up to $500,000 for married taxpayers and $250,000 for individual taxpayers from the sale of a principal residence, provided the taxpayer meet certain criteria,” Wantulok said.

Charitable contributions have also changed. Wantulok stated that taxpayers may now deduct charitable donations to public charities and other organizations up to 60 percent of adjusted gross income and that excess deductions may be carried over for five years. In 2017 it was 50 percent.

Many people believe that since the health care penalty was repealed that they cannot be assessed a penalty this year on their taxes. Wantulok explained that while it did get repealed, the repeal doesn’t go into effect until 2019. “Even though it got repealed taxpayers can still assess the penalty in 2018. There are a lot of people still a little bit unclear on that,” he said.