Tax Changes That Will Impact Families Everywhere
Most people have heard that a sweeping tax overhaul has been passed by the federal government and, like anything that potentially could impact someone's pocketbook, many people are wondering how this is going to impact them. The new tax bill changes the tax code in countless ways and some changes are temporary while others are intended to be permanent. For the family looking to keep some semblance of a budget, it is important to think about how this bill is going to impact their after-tax income. There are a few different important points that families should think about moving forward.Most get a Tax Cut Initially
What many people will like is that the tax bill provides a tax cut to almost everyone initially. This includes people who are in the bottom tax bracket all the way to those at the very top; however, what some people may not have noticed is that the tax cuts are set to expire over time. This means that some people will only get a temporary tax cut before seeing their tax rates increase.Doubling the Standard Deduction
When people are filing their taxes, they often claim a standard deduction (or a deduction that is double if they are filing jointly). In order to simplify the tax code, the tax bill has eliminated many of the additional deductions and has simply doubled the standard deduction. When people are trying to decide whether or not to itemize, they need to figure out if their itemizations are greater than the new (doubled) standard deduction. Hopefully, many people will not have to itemize, meaning that the standard deduction doubling will benefit them.State Income Tax Deductions Exist
There was a worry that the new tax bill would eliminate deductions for paying state and local taxes. Fortunately, the final bill kept in this deduction for an amount up to $10,000. That means that people should make sure not to overlook this large deduction because it could lead to people overpaying on their taxes by a significant amount.
After all is said and done, it is important to understand that everyone's situation is different and, therefore, everyone will be impacted by the change in the tax code in different ways. For this reason, it is a good idea to sit down with an experienced attorney to ensure that families are filing a way that acts in their best interests.