Major tax reform that affects both individuals and businesses was approved by Congress and signed by the President on Dec. 22, 2017. It’s commonly referred to as the Tax Cuts and Jobs Act, or TCJA, or tax reform. Throughout 2018, the IRS has been working closely with partners in the tax return preparation and tax software industries to implement the new law and ensure taxpayers can count on the IRS, tax professionals and tax software programs when it’s time to file their returns. While the Tax Cuts and Jobs Act law includes tax changes for individuals and businesses, here is a brief break down what’s new for the 2018 federal tax return individual taxpayers will be filing in 2019.
- increasing the standard deduction,
- suspending personal exemptions,
- increasing the child tax credit,
- adding a new credit for other dependents and
- limiting or discontinuing certain deductions..
Because of the many changes in the tax law, refunds may be different than prior years for some taxpayers. Some may even owe an unexpected tax bill when they file their 2018 tax return next year. To avoid these kind of surprises, taxpayers should perform a Paycheck Checkup to help determine if they need to adjust their withholding or make estimated or additional tax payments.