Q&A: It’s Tax Season. What Do I Need to Know?
Tax season can be a busy and confusing time of year. With the Tax Cuts and Jobs Act of 2017 being signed into law in late 2017, this year’s tax season is perhaps even more confusing than usual. To help, we have listed 9 things that you’ll want to know about this tax season.
1. The Deadlines:
The tax filing deadline for the 2017 tax year is Tuesday, April 17th . April 15th falls on a Sunday in 2018. And, because of Emancipation Day, a legal holiday in Washington, D.C., falling on Monday, April 16th, the deadline for 2018 is Tuesday, April 17th. The deadline for corporate returns is March 15th.
2. The New Tax Law (Tax Cuts and Jobs Act of 2017):
Although the tax code changed in 2017, those changes will not apply to the 2017 tax year. The new law took effect for the 2018 tax year. To read more about the changes that have taken place, read our Q&A on, “How will the Tax Cuts and Jobs Act of 2017 impact me?”
3. Retirement Plan Contribution Limits:
For all that has changed with the tax code, much has stayed the same. Note the limits on retirement plan contributions below. The only increase in retirement plan contribution limits applies to employee contributions to 401(k) plans.
- 401(k) contribution limit for employees increased to $18,500, up from $18,000 (Catch-up provision is still $6,000)
- Traditional and Roth IRA limits remain unchanged from 2017 at $5,500 per individual (Catch-up provision is still $1,000)
- Simple IRA contribution limit still $12,500 (Catch-up provision is still $3,000)
4. Paycheck Check-up:
If you’re like most other taxpayers, you may pay less in taxes in 2018. It might be worth it to adjust your withholding setup to get more money in your pocket sooner. The IRS has created a new withholding calculator, found by clicking this link. The calculator will take the information you provide and will suggest a more accurate withholding allowance to cover your projected tax liability for 2018.
5. Identity Theft is Declining:
The IRS is working to prevent identity theft. According to IRS.gov, key identity theft indicators continued to decline dramatically in 2017, including a 40% drop in the amount of taxpayers that reported being a victim of identity theft.
6. Avoid Becoming a Victim of Identity Theft:
To decrease your chances of becoming a victim of identity theft, it’s best to gather your tax documents and prepare your return as soon as possible. It’s always important to be on guard for all types of identity theft scams, but especially during this time of year. The IRS will not call you and ask for any information over the phone. This is a commonly used phishing attempt by identity thieves. As long as you take regular precautions before sharing any of your personal information, and you file as soon as possible, you will decrease your chances of identity theft. If something doesn’t seem right, contact your tax professional of financial advisor.
7. Processing time on tax refunds:
The IRS states on their website that choosing to e-file remains the fastest and safest way to file an accurate income tax return. And, the IRS anticipates that most refunds will be issued in less than 21 days from the date of filing. The IRS does have a “Where’s My Refund? online page and the IRS2Go phone app for taxpayers to check the status of their tax refund.
8. DIY vs. hiring an accountant:
We can certainly appreciate the desire for some to avoid the cost of hiring an accountant by preparing their own tax return. In fact, for those with simple tax situations and a firm understanding of the tax code, that may be the most prudent thing to do. However, we also see the benefits that a trained tax professional can bring to your tax plan. Unless you’re sure you have a complete understanding of the tax code, we would encourage you to explore seeking professional help with your tax return.
9. Booking with your accountant:
If you have an accountant but haven’t booked an appointment yet, do it sooner rather than later! Accountants get extremely busy as the filing deadline approaches. The last thing you want to be doing is searching for a new accountant on April 14th. Book your appointment early to avoid having to do so.
If you have tax-specific questions, we encourage you to contact your tax professional. For anything else, feel free to reach out to our team of experienced advisors.
CarsonAllaria Wealth Management does not give tax advice. Please seek tax advice from a qualified tax specialist.
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