According to the IRS, tax season is again off to a slow start. Over the past five years taxpayers have not been in a rush to file as early as possible. During the 2016 filing season, 38.7 million returns were filed through the first week of February. The number of returns filed this year during this time period – only 28.6 million.
A recent survey showed that the majority of taxpayers are still confused over the changes that were implemented in the 2018 tax year as a result of the Tax Cuts and Jobs Act, creating a reluctance to file early.
The good news is, here at Century, we are constantly staying up to date on the latest changes and how they potentially affect our clients.
Here are three changes that took place for tax year 2019:
- Alimony payments from divorce or separation agreements made or changed in 2019 or later will not be deductible.
- The penalty if you don’t have health insurance (and didn’t receive an exemption) has been eliminated.
- The threshold for deducting qualifying medical and dental expenses has risen from 7.5% of your adjusted gross income (AGI) to 10%, making it harder to deduct those expenses. So, if your AGI is $60,000, you could only deduct those qualifying expenses that exceed $6,000. Expenses of $7,000? You can deduct $1,000. Expenses of $4,000? You’re out of luck. (Remember, though, that the standard deduction is now much higher than it was in recent years, so many more people should simply take that instead of itemizing.)
We understand that tax time is one of the most dreaded and stressful seasons many people face. In fact, statistics show that this dread turns into procrastination. About 1/3 of all individual tax returns will be filed in the final two weeks before Tax Day!
This is NOT a good idea for most of us.
Did you know that there is an 85% chance that you either owe nothing or will get money back? These odds are better than the lottery!
In general, many people procrastinate when faced with the unknown because the unknown is scary. It is very rational to prepare for the worst when facing the mysteries of the US tax code. However, for many people, April 15th is a time of needless worry since the majority of people get back a sizable refund. While gathering together the time and papers needed to complete your tax return is a pain, 4 out of 5 of all taxpayers find a silver lining to completing their taxes.