Tax filing season is officially underway and starting Monday, the IRS will start accepting tax returns.
This year, you may want to file sooner rather than later, as reported by CBS. Why?
- Refunds should be larger
- For most people, this tax season will be refund season as well — with a bigger return. In 2016, roughly 68% of filers claimed the standard deduction. The new tax law nearly doubled the standard deduction for 2018 to $12,000 for single filers and $24,000 for married couples.
- Protects from identity theft
- Filing early is also a good way to protect yourself from identity theft, a scam at the top of the IRS’ list. If you file before a criminal can use your personal information, then the fraudulent return will be rejected by the IRS.
- Get to the front of the line
- Another reason to go early is to get to the front of the line of tax returns selected for additional review. This will impact a lot of returns that include claims for certain tax credits. It applies to the millions of filers who claim the earned income tax credit or the additional child tax credit.
It all comes down to the fact that it’s your money, so there’s no time like the present to claim it. The disruption from the partial government shutdown and the recent absence of a large portion of recalled IRS employees — already is setting up delays for this tax season. The complexities of the new “tax cuts and jobs act” laws also presents challenges.
But those tax credits are not all the same. Some of the deductions you might have claimed last year will no longer be allowed.
Nine deductions have been erased by the new tax laws, and will remain out of action through 2025, unless Congress makes the tax law permanent.
As reported by CBS, a few of those erased include:
- Personal exemptions
- Last year, everyone could claim this deduction which was $4,050 for yourself and each family member listed on your return. Lawmakers say the doubling of the standard deduction effectively replaces the exemption. Individuals filing will benefit, but families – not as much. The higher child tax credits should help, though.
- Home equity loan interest
- The new tax law generally limits the deductibility of mortgage interest on up to $750,000 of debt used to get a home. They also do not allow deducting the interest on home equity loans used in many common transactions.
- Job expenses
- The deductions you’ve claimed for job related costs like license fees, required medical tests, clothing, and equipment are no longer allowed. Because your employer can still deduct those costs, you may consider asking them to help with the expenses.
Other deductions no longer allowed are for moving expenses, tax preparation fees, parking and transit reimbursements, casualty and theft losses, and donations to colleges to receive tickets for athletic events.
For more on deductions no longer allowed, visit CBS.