Remember the Tax Cuts and Jobs Act enacted in the closing days of 2017? That law marks the most significant reform of the U.S. tax code in more than 30 years. What will the new law mean for your 2018 tax filing?
Did you know that the new law eliminates the personal exemption? And, it almost doubles the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples filing jointly.
Also, there were significant changes to the state and local tax deduction, or SALT. The SALT deduction historically was a sizable deduction for taxpayers, but now is capped at $10,000.
Then there’s healthcare. Under the new law, Americans can claim itemized deductions for out-of-pocket health-care costs exceeding 7.5% of their adjusted gross income during the 2018 tax years. Note that next year, that threshold will climb to 10%.
Experts predict that fewer 2018 tax returns will be itemized because of the many changes. According to the Internal Revenue Service (IRS), about 30% of tax filers previously itemized their returns. Now, the nonpartisan Tax Policy Center predicts that number could fall to about 10% this year.
And if the new tax law wasn’t enough, retirement or other life changes may mean your taxes are more complicated this year.
Does it all sound confusing and complex? It can be. And mistakes can be costly.
There is good news: AARP Foundation Tax-Aide offers free tax preparation help to anyone. Founded in 1968, the AARP Foundation Tax-Aide has served 68 million people so far. If you’re 50 and older and can’t afford a tax preparation service, the service is especially for you.
Staffed with IRS-certified volunteers, AARP Foundation Tax-Aide has more than 5,000 locations in communities across the nation – at libraries, malls, banks, community centers and senior centers. Once you’ve found a community location, see what to bring to your appointment.
Another option you may want to explore is the IRS’ Free File program delivered by the Free File Alliance; a nonprofit comprised of tax preparation companies. The program is geared toward low and moderate income taxpayers with an adjusted gross income of $66,000 or less, and provides step-by-step tax filing guidance.
JOIN FOR JUST $16 A YEAR