Archives for February 23, 2018

We know that you work hard for your money and often a tax refund may be the biggest check you get all year, so we’re here to let you know how the new tax reform legislation may affect your tax refund next year.

The new tax law is the largest piece of tax reform legislation in 30 years and was signed into law on December 22, 2017. For most people, these tax changes impact tax year 2018 (the taxes you file in 2019) and not tax returns you’re filing now. Overall, the changes associated with the new tax law may lower taxes for individuals and small businesses.

Some of the highlights for taxpayers include:

• Lower individual tax rates

• Increased standard deduction

• Increased child tax credit

• Elimination of dependent and personal exemptions

• Elimination of some itemized deductions
• $10,000 cap on the deduction for state income taxes, sales, and local taxes, and

property taxes combined

• 20% deduction for “pass-through” entities (sole proprietorship, partnership, S corp.)

Increased expensing limits for capital assets

So just what will these changes mean for your 2018 tax refund? Here is a break down based on your individual tax situation.

A FAMILY WITH KIDS

Although there was an elimination of the dependent exemption deduction beginning for tax year 2018, families with kids may see a bigger tax refund next year since the child tax credit doubled and went from $1,000 to $2,000. In addition, the amount that is refundable grows from $1,100 to $1,400. The law also adds a new, non-refundable credit of $500 for dependents other than children. Finally, it raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000. Tax credits are a direct reduction from the taxes you owe so they mean more than a deduction that reduces taxable income.

CLAIMS THE STANDARD DEDUCTION

If you claim the standard deduction you may see less tax liability in 2018 since the new tax law nearly doubles the standard deduction amount. Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes (the ones you file in 2019). Married couples filing jointly will see an increase from $12,700 to $24,000. These increases mean that fewer people will have to itemize. Today, roughly 30% of taxpayers itemize. Under the new law, this percentage is expected to decrease.

CLAIMS ITEMIZED DEDUCTIONS

If you claim itemized deductions you may see fewer tax deductions that lower your tax deduction especially if you live in a state with high property taxes since the new law limits the amount of state and local property, income, and sales taxes that can be deducted to $10,000. In the past, these taxes have generally been fully tax deductible.

The law also caps the amount of mortgage indebtedness on new home purchases on which interest can be deducted at $750,000 down from $1,000,000 in current law.

If you itemize you will also see the elimination of some miscellaneous itemized deductions like unreimbursed employee expenses under the new law.

SELF-EMPLOYED, S CORPS, AND PARTNERSHIPS

If you are self-employed or have an S-Corp or partnership you may see lower tax liability which may increase your refund since the new law includes a 20% deduction for incomes from certain type of “pass-through” entities and almost doubles the amount small businesses can expense when they purchase business equipment from the 2017 Section 179 amount of $510,000 to $1,000,000.

WHAT DO YOU NEED TO DO?

Because of the changes to the 2018 tax laws such as changes to itemized deductions, increased child tax credit to $2,000, the new dependent credit, and the eliminations of dependent and personal exemptions, you should file a new Form W-4 with your employer in response to the new tax law, if your personal situations changed, or if you started a new job.

The IRS is also working on revising Form W-4 to reflect additional changes in the new law, so employees can update their withholding in response to the new tax law changes. TurboTax has you covered with TurboTax Tax Caster so you can estimate your tax liability for 2018. Stay tuned for TurboTax updated W-4 calculator so you can calculate your personal allowances for your withholding from your paycheck.

Self-employed and small business owners may also wish to make adjustments to estimated taxes they pay. QuickBooks Self-Employed will help you easily figure out your estimated taxes.

TurboTax Has You Covered

TurboTax has you covered and will be up to date with the latest tax laws. If you have more questions while doing your taxes, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live tax experts can even review, sign, and file your return.

One piece of financial advice that you have probably heard over and over again is the need for an emergency savings fund.

The thinking goes that everyone should have three to six months’ worth of living expenses set aside in the event of a sudden job loss or to cover a large unexpected expense, like a car repair or medical bill.

An emergency fund means you won’t have to turn to credit cards or high-interest loans in the event of a financial setback.

Despite the prevalence of this advice, it appears many people have been unable to set aside that much money. But maybe that situation is beginning to change.

In the latest survey by personal finance site Bankrate.com, 33% of Americans say they do not have more emergency savings than credit card debt. That includes 21% who say their credit card debt exceeds their emergency savings and 12% who indicate they have no savings or credit card debt.

While one in three Americans are financially ill-equipped for an emergency, that is down from 41% in 2017 and 43% in 2016 and is the lowest level in the eight years of the survey.

“People have recognized the importance of savings since the financial crisis and it is only recently that we are seeing some progress in Americans ability to save,” said Greg McBride, chief financial analyst for Bankrate.com.

Fifty-eight percent say their emergency savings fund exceeds their credit card debt, which is up from 52% in the last two years and ties 2015 as the best seen in eight years.

McBride cites low unemployment, broader growth in household income and a renewed prioritization on savings over the past decade as factors in the increase.

The key to starting and building an emergency fund: Successful saving is all about the habit and paying yourself first by automating the savings through direct deposit, McBride said.

Being a mother is hectic.

That’s not news to us. It’s likely not to you. And it definitely isn’t to parenting blogger Cheree Lawrence.

Cheree, 33, shares her thoughts, feelings and tips on parenting at Oh So Busy Mum and as a parent to four girls aged 14, 13, six and five that’s exactly what she is.

And like us, Cheree is always on the lookout for time-saving tips, clever hacks and, most importantly, ways to stay in tip top shape all year round.

Cheree, like us, knows that raising kids is the best job in the world, but it’s demanding – and it’s even harder if we get run-down, exhausted or worse, sick. With that in mind, she likes to do the following – time-saving tips that provide health benefits too.

Clever!

1. Organise your day the night before

“We all know that being organised means getting out the door more quickly the following day. If everything is in its place, then getting ready to go is that much more simple.

“For a quick breakfast in the morning, I sometimes make a protein powder smoothie so that I can drink in the car while doing school drop off.”

2. Prepare meals and freeze

“I buy in bulk and cook in batches. It saves money and limits food waste plus ensures I’ve always got something for the kids and myself ready to go.

“Some of my favourite foods to freeze include; rice, cooked pasta, fruit, eggs and fresh herbs.”

3. Store healthy snacks

“I always make sure I have a healthy snacks for myself and the kids on hand.

“Fruit, nuts and carrot sticks are great options for the kids. I also love hummus and sometimes a protein bar to keep me going through the afternoon slump.”

4. Schedule you time

“You don’t need to run off for a week-long trip to Bali (unless of course, you want to) to recharge the battery.

“Try and organise a few hours to go for a walk with a friend, it’s the perfect mum time and is great for incorporating exercise into your day, without even realising.”

If your Valentine’s Day got a bit steamy and you’re now expecting a bundle of joy, check out some ways you can prepare for all your new expenses

But preparing for a child can be very expensive.

To help make your financial situation less bumpy during pregnancy and early parenthood, we have teamed up with hotukdeals.com to provide some great money-saving tips.

1.  Get in the clubs. Join the Boots Parenting Club. You will get ten Advantage card points for every £1 spent on baby products until your tot reaches the age of three. You also get tailored offers at each stage of pregnancy, free gifts, money off clothing and expectant mum products. For more info, see at boots.com/parenting-club. The Mothercare Club gives you more than £100 worth of vouchers, access to discounts like 20 per cent off maternity clothing plus member-only early sales. Visit bit.ly/2BJXKHR.
   SAVE: £500 a year – enough for a buggy
2. Free prescriptions and NHS dental treatment. Mums-to-be are entitled to free prescriptions and NHS dental treatment from when a pregnancy is confirmed until your baby is one. Ask your midwife for the relevant forms.
   SAVE: Average of £150 –  will buy three pairs of maternity jeans, a coat and three tops
3. Get it delivered. Save up to 20 per cent on nappies and baby food by signing up with Amazon Prime. Find out more at amazon.co.uk/gp/family/signup/welcome
   SAVE: Average of £145 – will get a top video baby monitor
4.  Apply for a grant. Some mums may be eligible for a Sure Start maternity grant to the value of £500 to help with the cost of a new baby. Check at gov.uk/sure-start-maternity-grant.
   SAVE: £500 – enough for a cot and moses basket
5. Cash in those coupons. Get free money-off vouchers from Johnson & Johnson at caringeveryday.co.uk/ coupons-and-offers and from P&G at supersavvyme.co.uk/offers/coupon.
   SAVE: Average of £30 each – enough for two massages
6. Do a supermarket sweep. Join the Asda Baby Club at babyclub.asda.com/sign-up and the Tesco one at tesco-baby.com. Both offer exclusive deals on own-label and big-name brands as well as competitions in which you can win baby essentials.
   SAVE: Average of £150 each – enough for the first year clothes