Tax Season Action Steps
Revisit Your W-4 Form- Taxpayers should complete a new W-4 form for tax withholding at their place of employment when life changes in a way that affects their income taxes (e.g., marriage or the birth of a child). In addition, withholding may need to change as a result of the Tax Cuts and Jobs Act (TCJA). The standard deduction has increased to $12,000 for singles and $24,000 for couples and itemized deductions for state income taxes and local property taxes (i.e., so-called SALT deductions) are capped at $10,000. As a result, fewer taxpayers will be able itemize deductions for mortgage interest and charitable contributions in the future.
Take Advantage of Investment Tax Breaks– Examples include Roth and Traditional IRAs for all workers with earned income and SEP accounts for those with self-employment income. Other tax-advantaged strategies are holding investments in taxable accounts for more than a year to qualify for long-term capital gains tax rates and purchasing tax-deferred annuities (note: select only annuities with low expenses).