The IRS recently released IRS Publication 5307 to assist taxpayers in understanding how the Tax Cuts and Jobs Act tax reform will affect their tax returns. The publication provides an overview of the Tax Cuts and Jobs Act, explains the major changes that will impact 2018 tax returns for individuals and provides guidance on the steps taxpayers should be taking to ensure their tax return will be what they expect when filed in 2019. Publication 5307 highlights changes to the following items and provides information on tax rate changes, health care coverage requirements and other areas of less common tax situations:
- Increase to the Standard Deduction for all filing statuses
- Suspension of personal exemptions for taxpayers, their spouse and their dependents
- Increase in the amount of the child tax credit
- Addition of a new credit for other dependents
- Limitation or suspension of certain other deductions
To assist your clients in understanding how the Tax Cuts and Jobs Act will impact their 2018 tax returns, urge them to perform a Paycheck Checkup (if they haven’t already) to determine if adjustments need to be made to their withholding or if estimated or additional tax payments should be made. Encourage your clients to compile all of their tax documents before their appointment with you to ensure filing a complete and accurate return. Most importantly, be ready to educate your clients when they have questions regarding differences between their 2018 tax return versus their prior year returns. The IRS anticipates that, because of the many changes to the tax law, refunds may be different for many taxpayers and that some will end up with an unexpected tax bill when they file their 2018 return.