The tax reform bill could mean more money in your paycheck, and it may already have happened.
The issue is that you could end up getting too much money or maybe not enough. It all depends on how you filled out your W-4 and right now it’s a guessing game.
The U.S Treasury estimates about 90 percent of us will see more take-home pay. But, Patrick Garcia says to keep that excitement in check for now. “You’re not gonna see effects for the paychecks until after February 15th so employers can catch up to the tax bill," said Patrick Garcia, a tax supervisor with Jackson-Hewitt.
According to Garcia the tax reform happened so quickly that many companies are having trouble helping employees fill out their W-4 in order to fit this new reform.
One aspect of that reform to take into account is write-offs. What you were able to take a tax break for last year and what you can this year may have changed. Personal and dependent exemptions were taken away…meaning they are just going to increase the standard deduction. “For married instead of it being $6,350 it’s gonna be up to $12,400," said Garcia.
If you are itemizing…state and local income tax along with property tax can be written off and the most it can be is $10,000. The Medicare rate can also be written off. It was lowered from 10 percent to 7.5 percent so you have an ability to write-off more medical expenses. “So pretty much you have a free for all for what you can write off without being limited," said Garcia.
Garcia also says keeping your receipts is always a good idea now more than ever because the exemptions being taken away could hurt a big amount of people.
The IRS says it will be publishing a new online calculator by the end of February that will help you decide how to adjust your allowances based on your personal and financial situation.
Every Saturday through April 14th CSUB will be offering free income tax preparation services to students, faculty, staff, and members of the community.