Last week the Internal Revenue Service (IRS) issued a new publication to help taxpayers learn about the recent tax reform law and how it affects their taxes. The IRS estimates they will need to create or revise more than 400 taxpayer forms, instructions and publications for the filing season starting in 2019 — more than double the number of forms it would create or revise in a typical year.
While the 2018 Tax Cuts and Jobs Act includes tax changes for both individuals and businesses, this publication — Tax Reform Basics for Individuals and Families — is specifically geared to individual taxpayers. According to the IRS, the publication breaks down the law in easy-to-understand language and highlights the changes that taxpayers will see on their 2018 federal tax returns they file in 2019.
Specifically, the new guide provides important information about:
- Increasing the standard deduction
- Suspending personal exemptions
- Increasing the child tax credit
- Adding a new credit for other dependents
- Limiting or discontinuing certain deductions
Highlights: IRS Tips to Prepare for 2018 Federal Tax Filing
Federal Income Withholding
What You Need to Know
- Due to tax changes in the Tax Cuts and Jobs Act, many taxpayers’ withholding went down in early 2018, giving them more money in their paychecks in 2018.
- You may receive a smaller refund – or even owe an unexpected tax bill – when you file your 2018 tax return next year, especially if you did not adjust your withholding after the withholding tables changed.Other changes that affect you and your family include increasing the standard deduction, suspending personal exemptions, increasing the child tax credit, adding a new credit for other dependents and limiting or discontinuing certain deductions.
What You Need to Do
- Use the IRS Withholding Calculator to perform a Paycheck Checkup to help you decide if you need to adjust your withholding or make estimated or additional tax payments now.
- Use your results from this calculator to submit a new Form W-4, Employee’s Withholding Allowance Certificate, to your employer.
- Make estimated or additional tax payments if the withholding from your salary, pension or other income doesn’t cover the 2018 income tax that you’ll owe for the year. Form 1040-ES, Estimated Tax for Individuals also has a worksheet to help you figure your estimated payments.
Federal Tax Refunds
What You Need to Know
- Expecting a refund? Some refunds cannot be issued before mid-February.
- By law, the IRS cannot issue refunds before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit.
What You Need to Do
- Be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations.
- Perform a Paycheck Checkup to help you decide if you need to adjust your withholding or make estimated or additional tax payments now.
To download IRS Publication 5307, Tax Reform Basics for Individuals and Families, click here. (14-page PDF)