It’s no secret that the tax season is full of changes that are difficult to keep up with and monitor year-round. From deadlines changing to new penalties and rising brackets, there are recently developed conditions that you may be unaware of that will affect you or your business’s taxes. Tax law changes often go unnoticed by the average eye and can truly affect the amount you pay or will have returned to you after tax day. Here are some alterations that demonstrate just how much tax laws are modified throughout the year that you may not know until the last minute.
Tax Law Changes: Standard Deductions
One of the biggest things that people care about when it comes to tax law changes is what you can claim as a deduction that will benefit you or your company. Due to the low inflation rate this year, the standard household deduction rose from $50 to $9,300 this year. This is because of new deduction policies such as when you are working from home and have a home office used exclusively for work. You can claim deduction on insurance and repairs for this office space. If you are running a business, up to 50 percent of your company meals and entertainment can be claimed as deduction if you keep records of how they served as a business purpose. Another important thing that will affect your taxes is that if you had to move because of a job or change in job location, you can claim a deduction for that as well. These few changes are big enough to change how big your tax returns will be the following year.
Tax Law Changes: Tax Credit
Tax credit opportunities not only affect families and singles alike, but also those who are attending college. Tax law changes in the American Opportunity Tax Credit shows that while it was originally planned to become unavailable in 2010, it will now continue through 2017 and has been capped at $2,500 per student. Another tax credit change concerns the Earned Income Tax Credit has been made permanent for those who file jointly and have three or more qualifying children. The tax credit you can collect from this has also increased and is on it’s way to including low-income workers who have no children. If you’re looking to get support for your children and their education, paying attention to these tax law changes is pivotal!
Tax Law Changes: Repercussions
It is undoubtedly a fear of many that consequences will be met for not filing taxes correctly because of unnoticed tax law changes. An example of this would be that your passport can now be revoked or denied if you have a tax debt of $50,000 or more. This impacts the way you’re able to travel or visit family that is out of the country. Another change is that you’re now required to pay a fine by Obamacare guidelines for any month that you, your spouse, or dependents don’t have health insurance that meets minimum coverage requirements. The penalty amount has jumped from $285 per person to $2,085 per person in the last two years which is a dramatic increase that will definitely hurt your finances.
Watching for Tax Law Changes
There are countless big and small tax law changes that occur over the year, so watching for these changes is crucial in saving money as well as getting your taxes done accurately and on time. There are steps you have to take throughout the year to ensure you have all the requirements for certain deductions and tax credit options, and it can be stressful keeping track of all of them. Working with a company like PayTech can help you in monitoring your accounting and taxes so that you don’t have to worry about missing any big tax law revisions and can get back to managing your company, mistake free.