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Changes to Tax Laws May Affect You

Are you ready for tax season? We know filing your taxes can be overwhelming and stressful. But with a little bit of knowledge and a few helpful tips, we hope to help make the process easier for you.

In December 2017, major tax reform, referred to as the Tax Cuts and Jobs Act, was enacted. This tax reform affects both individuals and businesses.

Changes in the new legislation include: reduced tax rates for most people; elimination of personal exemptions; increased standard deductions ($12,000 for single persons, $18,000 for heads of households and $24,000 for married couples filing jointly); increased tax credit for children and dependents ($2,000 per qualifying child and a new $500 credit for qualifying dependents); and changes to itemized deductions.

To eliminate surprises at tax time, you should examine your paycheck and see if you’re withholding the right amount of tax. Withholding too little each pay can result in an unexpected bill at tax time. If you’re withholding too much, you can make adjustments to receive more in your paycheck each pay period. If you do this, expect a smaller refund each April. Use the IRS Calculator online at https://www.irs.gov/individuals/irs-withholding-calculator to calculate how much you should be withholding. Keep in mind that any changes you make to your withholdings at this point will affect your 2019 returns and not the taxes you are currently working on filing for 2018.

Once you’re ready to file your taxes, gather all your December financial statements. You can use them to report your year-to-date interest and dividends. You will also receive a 1099 Interest form if you earned $10 or more in dividends or a 1098 Mortgage Interest form if you paid more than $600 in loan interest on your home loan.

To complete the filing process, the IRS recommends using tax software and e-file or seeking the help of a tax professional to submit your taxes electronically. If you think you’ll owe money this year, stop by the credit union to see if you qualify for a personal loan.