Tax season is over, but I need to talk about taxes for one more week. And much of what I’m going to include here are things I have mentioned before, but I thought it would still be valuable to put it all together.
The Tax Cuts and Jobs Acts (TCJA) came at a time that made it feel like there was no break between its passage and the start of tax season. That kept most of our attention on what was due first, under the old rules, while keeping an eye on the implementation of the new one. For yes, the congressmen and senators passed the rules, but just how they will work can be unclear before the IRS implements them. That is no small task, and the implementation will take a lot of time and a lot of money (about $397 million as this article states).
So along the way during tax season, I certainly did touch on some of the aspects of the TCJA, but always with some caveats, and ones that I think are worth stating again here. First, with something that takes that much money to put into effect, you can tell this is a big deal. And it is a big deal because it is going to affect EVERYONE. But second, it is also important to note that it will not affect everyone in the same way.
Many people have already seen a change in their paycheck as new withholding rates were put into effect, and many people were excited by this change because it meant they took home a little more money. But even when that is the case, it does not mean that everything else will remain the same in your tax picture, and you are just getting to keep more money. That money you see now could mean you will get less of a refund, or it could even mean that you will be left with a tax bill come next filing season.
A little vigilance could hold off these unpleasant surprises, though. The best place to start with that may be the IRS’s withholding calculator. This will at least give you a good enough baseline to let you know if you should think about changing how money is taken out of your paycheck.
As you answer the questions for the calculator, though, you may not be sure of some answers, or you may be confused as to how they will affect your tax situation. Remember, this is a complicated issue, so you should not feel bad if it is not clear. Also remember, though, that we are here to help you figure it all out, and now that tax season is over we are ready to make appointments to help you plan for the future.
It can be even more confusing (and almost certainly more complicated) if you are a business owner. After all, the TCJA affects everyone paying taxes, and businesses have to pay taxes, too. Also, those entities aren’t really helped by that fancy calculator.
I don’t want to get into any of the specific changes in the law here, for that will just take up much too much space. The IRS, however, has gathered information on many of these changes, and how it is handling them, on one web page.
Be warned, there is already A LOT of information of that page, and it is bound to only grow. That is another reason why I don’t always want to go into specifics on the changes, because there is no way that I can cover them all. And even if by some Herculean effort I did cover them all, it still would not be clear how they all add up to affect any one person or business.
So again, don’t be afraid to reach out for that personal touch. Information and knowledge will keep you from being surprised by any of the new changes, and give you the best chance to make them work in your favor.
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