It’s that time of year when thousands of taxpayers have all kinds of questions. In fact, this year there could be even more questions than normal, thanks to the Tax Cut and Jobs Act. So what do you if you have a lot of questions? You could try finding answers on IRS.gov, or you could call the agency directly. Sometimes, you’ll get help you seek, but not always. You can contact your tax preparer for answers to your important tax questions, as well.
Common Tax Questions Answered
In the meantime, here are the answers to some of the most common tax return questions for the 2019 tax season. If your questions aren’t answered here, then you can contact GROCO for more help.
What happened to my tax bill? It was supposed to go down
– This is one of the most common questions so far in 2019. And the most likely reason is because of the changes to the SALT deduction: state and local taxes. Because this deduction has been capped at $10,000, many people have lost a large deduction from their return, especially in high-tax states. Taking the larger standard deduction can help some taxpayers. Itemizing will still be better for some, but deductions are more limited now because of the SALT changes.
What happened to my refund?
– Many taxpayers have been surprised with a much smaller refund this year. And in some cases, people have owed money to the IRS after filing. So what happened? All year long, the IRS warned taxpayers to check their withholding amount to match the new tax reform. Additionally, most people received bigger paychecks because fewer dollars were withheld each pay period. The problem is, many taxpayers probably didn’t notice the difference. But they’re definitely noticing it in their refunds.
Should I itemize or take the standard deduction?
– We already mentioned it briefly, but for most taxpayers taking the new standard deduction will be the way to go this year.Infact, as many as 90 percent of taxpayers will use thestandard deduction this season, according to estimates.If you still have a large amount of deductions, then run thenumbers and see if your itemized deductions are greater than the standard deduction amount. If so, then itemizing still makes sense for you.
What other deductions and credits have changed?
– Several other deductions and credits have changed this year.
• The dependent exemption has been cut
• The mortgage interest deduction has been changed. It now has a cap, which allows you to reduce interest on up to $750,000.
• Fewer people will be affected by the Alternative Minimum Tax
• Only military members can deduct moving expenses
• You can’t deduct tax preparation fees
• Home equity loans are only deductible if used for buying, building or improving the home that secures the loan
Can I still deduct alimony payments?
– The old rules are still in effect for anydivorce finalized before January 1, 2019. So for this year’s tax purposes you can still deduct alimony.Going forward, you’ll no longer be able to deduct alimony payments, and the person who receives the payments will not have to report the money as income.
The post Answers to the Most Common Tax Return Questions for 2019 first appeared on Advisors to the Ultra-Affluent – Groco.
