Things You Need To Know Now About The Tax Bill
Brackets, standardized deductions, charitable donations, alternative minimum tax.
At this point, I just want to know if my paycheck will be smaller or if I'll get a tax refund.
Yes, I've heard the back and forth between those who are for or against the tax reform bill. Whatever feelings any of us have about it are best addressed in a voting booth. With all the information and dates flying around, I decided to do some research to find out what the most immediate changes will be for those of us who simply get up and go to work each day to bring home the proverbial bacon.
First and foremost, I am not a tax professional. I went in search of information and am sharing it from what I consider reliable sources.
You Will See Effects In Early 2018
The tax reform bill goes into effect January 1, 2018. The most immediate effect wage-earners will see is, most likely, less money being deducted from their paychecks. According to a statement on the IRS website, it could happen as early as February.
It Won't Affect 2017 Income Taxes
Wages for 2017 were earned under the law in place during that year, so the tax rewrites will not apply when you file your taxes before April 17, 2018. The new rules (brackets, standard deductions, etc.) will be in effect when you file your 2018 income taxes at the beginning of 2019.
If You Itemize, Be Aware!
If you itemize and make charitable donations to increase your deduction, Fortune.com suggests making that contribution now. Because of the significant increase in the standard deduction for 2018, you may not be able to take full advantage of a donation made next year.
The Healthcare Penalty For 2017
The tax reform bill does eliminate the penalty for individuals who don't have health insurance, but not until after January 1, 2018. If you didn't have health insurance in 2017 and were subject to the penalty, you will need to address that issue on your tax forms.