We know, we know — just where has 2019 gone?
We’re less than two months away from the start of 2020, and as we enter the home stretch into Thanksgiving and then the holiday season, there’s one thing looming in early 2020 that’s an afterthought now but will be relevant before we know it: taxes.
Yes, tax season is just weeks away, and being that this will be the second year of filing after the Tax Cuts & Jobs Act was passed around Christmas 2017, hopefully you learned from what went wrong and/or what went right last year when you filed and made adjustments accordingly for this year. Regardless, however, we’ll take you through a brief reminder about what to expect, provide you with a checkup so you can see where you’re at and (if applicable) what you need to do, and preview how things might change in 2020. Here’s a look:
What Tax Reform Means This Year
First, let’s recap some of the big things still in effect thanks to the Tax Cuts & Jobs Act that could impact your return:
- In the first year, the standard deduction increased from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for those filing jointly. For the 2019 tax year, standard deductions in both categories will increase by $400.
- If you have children, you’ll receive double the credit that you received before. The Child Tax Credit has increased from $1,000 to $2,000 per qualifying child under the age of 17.
- There’s a cap on claimable mortgage interest on up to $750,000 in property value. Before tax reform, homeowners could claim mortgage interest on up to $1 million in property value.
Give Yourself a Checkup
So how do you fare? If you want to give yourself a tax checkup, here’s what you can do:
- Check your total withholdings from last year and compare it to this year: Ideally, this should be done at about the halfway point of the year to allow you time to fill out new tax paperwork with your employer in case there’s a significant issue. It’s a simple task if you want to give yourself a tax checkup, all you need to do is pull your most recent pay stub and then compare it to the pay stub from a year ago around that time. If the federal and state tax withholdings are similar, then you can likely expect a refund or to owe to the tune of about as much as last year, should nothing else have significantly changed with your situation. If you’re withholding more, you can expect a bigger refund and vice-versa. It’s not too late to adjust your withholdings, though it won’t work as much for you as it would have should you have done it months ago.
- Did anything else change? Does one of your dependents no longer qualify for the Child Tax Credit? Are your charitable givings significantly down to the point where you’re not able to itemize and have to take the standard deduction? Do you no longer have student loan interest to deduct? How much other income do you have to claim? Consider everything when it comes to your tax situation, as it’s all a part of the big puzzle when it comes to your refund or what you owe. Again, there’s still time to adjust your withholdings with your employer to reflect any changes, though at this point these might be lessons better served for taking into next year.
So what’s in store for 2020 as it pertains to your taxes? For starters, the IRS has already released the standard deductions that filers can expect — it’ll be $12,400 for single filers and $24,800 for married, joint filers.
Noting all of this, how are your taxes faring for when it’s time to file? Do you expect to receive a refund, or will you likely have to settle with Uncle Sam? Or perhaps you’re in that sweet spot where you’re breaking as close to even as possible. There’s still time to rite the ship, but it starts with knowing where you are.