W2, 1098, 1040EZ. That's not code: it's a reminder that tax season is just around the corner.
But there are some major changes to the tax law that will impact every wage earner and home owner, when you file your taxes in early 2019.
That nice little pay raise you received this past February, when the new tax law took effect? You may find yourself giving some of it back in April, especially if your paycheck increased primarily due to less withholding by your employer.
So CPA Teresa Props said this is a year to save every financial document.
"Receipts and documents, notices from the IRS, anything that would have to do with improvements in your homes or real estate taxes, an assessment, anything that has to do with your home," she said.
She said the first three weeks of January are a great time to collect all possibly important documents.
Standard deductions increase
The good news is that if you take the standard deduction, as most people do, you will be able to deduct more this coming April. As a result, your refund may be larger.
"The standard deduction has always been rather low," Props said. "However, in 2018 they've increased the standard deduction, almost doubling it."
The standard deduction will increase to $12,000 for individuals, $18,000 for heads of household, and $24,000 for married couples.
Itemizing? You may see bigger tax bill
However, if you itemize and own a home, you may find your tax bill higher, because you can deduct only $10,000 in state and local taxes, including property taxes.
Many families who own larger homes will find they cannot deduct all their property taxes for the first time, which means you may owe more April 15 than you have in recent years.
Our partners at the consumer guide Angie's List say don't wait to file this year. And if you sense your tax situation will be significantly different, talk to a pro, rather than relying on simple software programs this time.
Angie Hicks, co-founder of Angie's List, said, "If you're curious about how the tax laws might impact you, reach out to a certified public accountant and do your research early."
Big changes to charitable deductions
If you take the standard deduction, you won't be able to deduct charitable contributions any more. You will have to itemize to use donations to reduce your tax owed.
But accountants say its still a good idea to donate clothing and money to charity by Monday, December 31, if only to help those in need.
That way you don't waste your money.
This story uses content produced by Angie's List, as part of a partnership with WCPO
Don't Waste Your Money" is a registered trademark of Scripps Media, Inc. ("Scripps").
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