|Filing begins January 29, 2018.|
Organization, you do it for your stuff but you should organize your finances, too. The 1099s and W-2s will be rolling in soon and it’s a good time to get things in order. After all, scrambling for a lost tax document just adds to your stress! You can’t actually file and have your taxes processed by the IRS until January 29, but you may want to figure out how you’re going to file this year and start thinking about 2018.
The big tax cut lawmakers just passed won’t affect the tax return that you about to file this year. So that’s the good news. Everyone likes more money but if taxes confuse you, 2018 will be even more stressful.
Rules are changing and rates go down for some more than others. But the thing you need to watch out for is what will your withholding be for 2018. You might see a bump in your paycheck in February as the IRS changes the withholding rates based on your income. This sounds simple enough but it’s something you need to watch.
For example, exemptions disappear in 2018 and tax credits like the Child Tax Credit are age limited to kids under 17 now. So those factors usually play into the W-4 you would fill out if you started a new job.
The biggest pitfall is politics. There are midterm elections coming up so you may see your paycheck rise more than it should. First, remember it’s a new law and sometimes you can’t anticipate how the law will function. More likely Congress wants to make sure people are happy to go into an election and pressure the IRS into increasing take home pay by pushing the withholding rates down too much. Ideally, you file your taxes every year and break even. Many like the idea of a refund or as I like to call it a free loan to the IRS. But what if they overdo it? Remember this is a new law and they have a big election with the control of Congress at stake. And by the time you find out you’re going to actually owe money, then your fate has already been cast. After all, the election happened months before . . . sunrise!
Do yourself a favor and keep an eye on next year’s withholding making sure it’s correct and you don’t find yourself without a refund or worse find out you owe for 2018.