Tax Deductions to Keep in Mind for 2018

April 11, 2018

With the 2017 tax season almost coming to a close, now is a good time to think about what you can do to make your 2018 taxes go even smoother with less stress. Acquainting yourself with changing tax laws, deductions, and exemptions is a great way to prepare for the year ahead.

Let’s look at some changes coming in 2018 that could impact how you handle your finances in 2017.

Deductions

The first notable thing to mention heading into the 2018 tax year is that deductions are changing. For married couples filing jointly in 2018 the standard deduction increases $11,000 to $24,000. Knowing this going into the year could potentially change your tax withholdings, while also giving you some peace of mind about what to expect in 2018.

Personal Exemptions

In 2018, personal dependency exemptions will be no more. This is what you claim for each dependent household member. Some say this will be offset by the child tax credit; but this credit won’t cover every dependent like the deduction previously did. So keep in mind that you can’t depend on your $4,050 personal dependency exemption in 2018.

Credits

Tax credits for having children will also change in 2018, going from $1000 to $2000. This doubled tax credit could potentially make a big difference based on your family situation, lessening your tax burden going into the next year. If you have a family, this is one change to take note of!

Savings

And finally, retirement savings caps will be raised in 2018, allowing you to invest more money, untaxed. 403(b) and 401(k) accounts can now receive $500 more per year, increasing the amount you can put into savings on a monthly basis. While $500 may not seem like a lot, over time it can add up and make a significant difference.

Tax time is stressful for the majority of Americans, and with the 2017 tax season coming to a close, thinking about 2018’s taxes may be the furthest thing from your mind. But by being aware of some tax changes coming next year, you can reduce your anxiety, change your withholdings, and maybe even invest more in your retirement.

If you have any questions about your 2017 taxes or the upcoming 2018 tax changes, call us at Relate CPA today! We are a Mount Dora, FL tax accountant team determined to help our clients save as much as possible while having a stress free tax season.