Tax season is finally in full swing, but it wasn’t that long ago there was some uncertainty about what the new tax regulations were going to mean for individuals filing their taxes this year. For the most part, changes in the tax code aren’t affecting how people are filing their taxes this year but could have an impact on what happens a year from now.
What’s important right now is that individuals filing their taxes are taking advantage of every perk and preparing for the year ahead. Since there’s still a little time before the April 17 filing deadline, now is the perfect time to talk about optimizing your tax return and preparing for the year ahead with these four tax tips.
Deduct Mortgage Interest While You Still Can
Up until December 31st of last year, home owners could deduct mortgage interest on up to a maximum of $1.1 million in debt. For 2018, this rule has changed to apply only to the first $750, 000 of debt. Individuals with high end real estate want to make the most out of their deductions this year, and plan for the year ahead.
Also, if refinancing your home is on your mind, you might want to reconsider. Any new refinancing mortgage starting this year will be subject to the new home acquisition indebtedness rules.
Changes in the ATM Affect Stock Options
Exemptions for the AMT, or Alternative Minimum Tax have increased to $70,300 for individuals and $109,400 for married couples that file jointly. The fact that fewer people are subject to the AMT under new guidelines means some individuals will find they have additional stock options.
If you’re somebody who’s been positively affected by this change, you might want to consider an ISO (Incentive Stock Option) if your employer offers them. You can purchase shares at a determined price, and with the changes to the AMT more people will be able to do this without additional incurring tax costs. Just remember to make an AMT adjustment when filing your taxes.
Deciding Between Itemization and the Standard Deduction
Depending on your income, filing status and other factors, sometimes it makes more sense to not itemize your tax return, and instead take the standard deduction. Individuals in higher income brackets, and those that are self employed typically benefit from itemized returns, but there are some things to consider.
Start with the fact that the standard deduction for 2018 is $6,300. For many individuals choosing to itemize that can result in money owed to the IRS which wouldn’t have occurred if using the standard deduction option.
Talk to a Financial Planner About What the Tax Changes Mean for You
The smartest thing you can do for the 2018 tax season, and looking forward into the future, is to talk to a knowledgeable financial professional about what the tax changes mean for you. There’s a lot of changes and trying to navigate them yourself will only cause unnecessary headaches and stress. We’re here to answer your questions and help you plan for your financial future. Contact Infinity Financial Services in Oakland today and let’s talk.