Michele J. Gaines
Article Published in the April 2018 Edition of Pittsburgh Avenue West Magazine
Tax Myths and Facts: The New Tax Laws
By: Michele J. Gaines, B.A. C.P. EA
There is always a formula for getting desired results. For example, if you want to bake a great cake, you begin with the right ingredients which include flour, eggs, and sugar instead of hot sauce, vinegar and wheat germ. The right ingredients will make a savory, mouth-watering, to-die-for cake as opposed to the wrong ingredients of hot sauce, vinegar and wheat germ which will not only taste bad, but will probably make you feel as though you've been poisoned. Using the right combination of ingredients will prevent your cake fact from turning into a cake myth.
The same is true of tax facts and since 2018 will be the rookie year for filing under the new tax laws, and knowing the difference between facts and myths will engender you to the manner in which the new tax laws will have on the tax filing process, so let’s examine the facts.
Fact 1. The new tax laws are incorporated under The Tax Cuts and Jobs Act.
Fact 2. The new tax law limits certain personal deductions. Those limitations include:
- State and local tax amounts;
- Home mortgage interest; and
- Exclusions in employee business expenses, tax preparation fees, investment expenses, Investment management fees, safe deposit box fees and investment fees from pass-through entities, such as S- Corporations and Partnerships.
Fact 3. The new tax laws have doubled standard deductions, eliminated personal exemptions, increased the child tax credit discontinued certain deductions and changed the tax rates and brackets for all taxpayers. These changes did not impact 2017 Returns, but they will affect 2018 returns filed starting in 2019.
Fact 4. If you are a seasonal, part-year employee or work more than one job, your withholding should be adjusted so that any and all tax due by year’s end has been accurately deducted/paid by you and your employer.
Fact 5. There are changes to depreciation that will affect Business taxpayers.
Myth 1. All refunds are delayed.
You can still get a fast refund. The IRS issues more than nine out of 10 refunds in less than 21 days. EITC AND THE ACTC refunds are the only refunds that cannot by law issued before mid-February of each year. It's already April, 2018 so plan to file now to get your return processed before the filing deadline of April 17, 2018 and your refund deposited into your account on or by April 20, 2018.
Myth 2. Ordering a Transcript is a secret way to get a refund date.
The transcript does not reveal the amount or the time a refund will be issued. The only tool that provides refund information is the "Where's My refund?" Tool located on the home page of IRS.gov.
Myth 3. Calling IRS or a Tax Professional will give you a refund date.
It's a big mistake to believe that tax professionals also have x-Ray vision into the IRS refund channels....we don't. Calling us and asking to find out what the refund genie has up its sleeve for you is a big myth....check the "Where's My Refund" on IRS.gov
Myth 4. The IRS will call or email taxpayers about their refund.
IRS does not make an initial contact with taxpayers by email, text messaging, phone call or social media in order to request financial or personal information. This is a telltale sign of a tax scam to no doubt, get your refund.
Myth 5. E-filing your tax return is best for all cases.
E-filing your tax return is not always safe, accurate or easy. E-filing is often free for those who qualify and if you have a tax amount due, you can easily make that payment at the same time you e-file your Return. If your tax return is a simple return and does not require complicated schedules attached, then e-filing is the most efficient manner to file and get that long awaited refund.
Michele J. Gaines is an Enrolled Agent and federally licensed with unlimited rights of representation in tax practice before IRS.