You may have heard the news about the new tax bill that passed Congress and was signed into law. You may have seen news reports already talking about the effects of that tax law. However, keep in mind that anything you see relating to the new tax law is based upon what it will do NEXT YEAR.
Your 2017 tax law is already in the books, and the taxes you are doing from now until tax filing day on April 17th (yep, April 17th this year) are all based on 2017 tax law which is basically the old tax law from before the Republicans took power last year.
So, no matter what some politics obsessed Twitter follower or Facebook friend says, they did not save any money thanks to the new tax law on the taxes they are filing in the next month or two.
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What The Old Tax Law Means to You
Since this is NOT the new tax law being used on your 2017 taxes, you need to forget about everything you heard when the new tax law was passed. It does not apply on the taxes you are filling out right now. So, what does that mean to you?
- There still is a penalty for not having health insurance. And, the IRS announced that it will no longer process returns that do not have an answer for the health insurance question.
- There is not a bigger standard deduction. Again, this will happen for the 2018 tax year, for taxes that you will file in 2017. So, unless your situation changed, or you were really close to the line last year, you probably still need to itemize if that is what you did for last year.
- You can still deduct all of your state property and income taxes. One of the big issues with the new tax law is that it limits the amount of state income and property taxes you can deduct. This is supposedly only a problem in a handful of states. However, yours truly might have some issues because we have an HOA-type organization that is funded by a property tax rather than by standard fees. I’ll have to see how close I come to that $10,000 limit, but not for this year. That’s on next year’s tax returns. (Same for you.)
- There is no extra qualified business income deduction. Kind of a nice surprise for those of us that run our own businesses, it looks like we get an extra tax deduction. Yea! Of course, that won’t be on this year’s taxes (Boo!) so you’ll still pay through the nose as a self-employed businessperson, especially thanks to that self-employment tax. So, in the meantime, be sure to deduct everything you can to save your business income.