What’s Changed? 2018 Tax Reform Changes
According to the latest news release from the Internal Revenue Service’s “Tax Time Guide” (irs.gov) the following key changes to tax filings from previous years are as follows:
- Tax rates lowered. Starting in 2018, there are seven income tax brackets, ranging from 10 percent to 37 percent.
- Standard deduction nearly doubled over last year. For 2018, the basic standard deduction is $12,000 for singles, $18,000 for heads of household and $24,000 for married couples filing a joint tax return. Higher amounts apply to people who are blind or filers who are at least age 65. The increased standard deduction, coupled with other changes, mean that more than half of those who itemized their deductions – for mortgage interest, charitable contributions and state and local taxes – in tax year 2017 may instead take the higher standard deduction in 2018, according to IRS projections.
- Various deductions limited or discontinued. For example, the state and local tax deduction is limited to $10,000, $5,000 if married and filing a separate return, and new limits apply to mortgage interest. In addition, the miscellaneous itemized deduction for job-related costs and certain other expenses is not available.
- Child Tax Credit doubled, and more people now qualify. The maximum credit is now $2,000 for each qualifying child under age 17. In addition, the income limit for getting the full credit is $400,000 for joint filers and $200,000 for other taxpayers.
- New credit for other dependents. A $500 credit is available for each dependent who does not qualify for the Child Tax Credit. This includes older children and qualifying relatives, such as a parent.
- Personal and dependency exemptions suspended. This means that an exemption can no longer be claimed for a tax filer, spouse and dependents.
Resources for Last Minute Tax Help
- The Volunteer Income Tax Assistance (VITA) – These are IRS-certified volunteers who provide free basic tax return preparation assistance in filing electronic returns. These service are available free of charge for the following people: Those who generally make $55,000 or less, persons with disabilities and limited English speaking taxpayers who need assistance in preparing their own returns.
- Tax Counseling for the Elderly (TCE) – This program offers free tax help for all taxpayers who are 60 years of age and older, specializing in questions about pensions and retirement-related issues unique to seniors.
Before visiting either VITA or TCE you will need to have the following documents available. If they are applicable to you:
- Proof of identification (photo ID)
- Social Security cards for you, your spouse and dependents
- An Individual Taxpayer Identification Number (ITIN) assignment letter may be substituted for you, your spouse and your dependents if you do not have a Social Security number
- Proof of foreign status, if applying for an ITIN
- Birth dates for you, your spouse and dependents on the tax return
- Wage and earning statements (Form W-2, W-2G, 1099-R,1099-Misc) from all employers
- Interest and dividend statements from banks (Forms 1099)
- Health Insurance Exemption Certificate, if received
- A copy of last year’s federal and state returns, if available
- Proof of bank account routing and account numbers for direct deposit such as a blank check
- To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms
- Total paid for daycare provider and the daycare provider’s tax identifying number such as their Social Security number or business Employer Identification Number
- Forms 1095-A, B and C, Health Coverage Statements
- Copies of income transcripts from IRS and state, if applicable
Find a VITA or TCE Site Near You
VITA and TCE sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations across the country. To locate the nearest VITA or TCE site near you, use the VITA Locator Tool or call 800-906-9887.
When looking for a TCE site keep in mind that a majority of the TCE sites are operated by the AARP Foundation’s Tax Aide program. To locate the nearest AARP TCE Tax-Aide site between January and April use the AARP Site Locator Tool or call 888-227-7669.
Low Income Taxpayer Clinics (LITCs)
What it is: A federal grant program that gives money to legal-aid and legal-services organizations to help low-income taxpayers or taxpayers who speak English as a second language. Law schools and business schools also are common providers. Some charge nominal fees.
How it works: The program generally provides representation for people in IRS disputes, including audits, appeals, collections and litigation. It also can help respond to IRS notices and fix account problems. For 2019, the income ceiling was 250% of the federal poverty rate, but some programs may have a little wiggle room.
Get help from the Low Income Taxpayer Clinic program.
If you’re over 60
AARP Tax Foundation
What it is: A nonprofit arm of AARP that operates the Tax-Aide network of tax preparation sites for the IRS’s VITA and TCE programs.
How it works: AARP’s Tax-Aide connects taxpayers with tax counselors who have advanced IRS training. It also operates an online FAQ page where you can submit tax questions to IRS-certified volunteers. You don’t need to be an AARP member to get free tax help.
Get help from the AARP Tax Foundation
What it is: A Department of Defense program that provides financial and legal resources, among other things, to military members and their families. The tax program is called MilTax.
How it works: Trained MilTax consultants are available to give free tax help by phone seven days a week at 1-800-342-9647 or 1-703-253-7599. Live chat is also available. MilTax is part of the VITA program, which means you also can get face-to-face help on base or nearby.G
IRS Taxpayer Advocate Service
What it is: If you have a tax problem contact this independent organization within the IRS that protects taxpayer rights.
How it works: You can turn to the Taxpayer Advocate Service for free tax help if you’ve already tried to resolve your tax problem through normal IRS channels or you think an IRS process isn’t working the way it should. There’s at least one Taxpayer Advocate office in every state. Contact the Taxpayer Advocate Service