Sheldon, Iowa — The deadline for filing our federal tax returns is a little less than a month away. But northwest Iowans are finding recent changes in tax law will hit their bottom lines NEXT year.
Mikal Claar with Cain Ellsworth & Company, certified public accountants in Sheldon says that most of the itemized deductions for business expenses will vanish for the 2018 tax year.
He says if you or your tax preparer are doing your 2017 taxes now, this change does not affect that return, but beginning this year (for 2018 taxes filed in 2019) those expenses are not deductible.
Federal changes late in 2017 meant many of us got more in our paychecks starting in January, which may not necessarily be a long-run tax benefit. The I-R-S released new withholding rates in mid-January, which also changed the picture.
It’s possible, however, since everyone’s situation is different — that under these new withholding rates, not enough is being withheld from your paycheck, which could cause you to end up owing tax instead of getting a refund next year. The IRS has released a new online calculator. Just do a search for “Withholding Calculator 2018” and the IRS website should come up. Just plug in your numbers and it should help you determine if you should give your employer a new W-4 to withhold more from your monthly paycheck.
Many Iowans who are using a home equity line of credit to buy cars and to make other big purchases are finding the interest on those payments will no longer be something they can write off, says Claar.
Experts say you might want to consider refinancing that line of credit into your home mortgage because then it would qualify.
Interestingly enough, Claar says that many of these tax changes will “sunset” in seven years, due to the federal balanced budget amendment, which says that since tax cuts mean less revenue into the federal government, they can’t stay in place indefinitely.
Again, these changes do not affect the 2017 tax return that you or your tax preparer are probably working on now. These changes started in January 2018, so they won’t be a concern until you file THIS year’s taxes, in 2019.
