The season is beginning to change, the sun is out longer, the days are getting hotter and moods are lifting. Don’t “Spring” to conclusions too fast…remember we still need to get through tax season first. Who doesn’t love filing their taxes, filling out the countless forms and adhering to the ever-changing tax regulations? Each year, the IRS makes changes to the ways in which taxes are filed, and this year the “hot topic” is the Standard Deduction increase.
The Standard Deduction typically cuts people a break when filing for taxes and can take thousands of dollars off your tax bill. One thing the IRS understands is that it’s expensive to live. We have mortgages to pay, food to buy, cars to pay for and kids to provide for; All of that can add up rather fast! That’s why Standard Deduction was put in place, allowing some income to be set aside tax-free to help people meet accumulating costs! Who knew living could be so expensive?
When filing for taxes, there are two options for subtracting money from your total incomes and that is either Standard Deduction, or you could itemize your taxes; Meaning, take everything you spent over the course of the year on things like medical expenses, mortgage interest, charitable giving and property taxes, add it all up and deduct that from your adjusted gross income.
Sounds pretty good if you have a lot to itemize right? Especially since prior to this year, the Standard Deduction only accounted for roughly $12,000 (if you were married filing jointly). If you had a lot of expenses (greater than $12,000), then itemizing would have been in your best interest.
But wait a minute. It’s a new year, the IRS has yet again changed the rates, and they have done so quite significantly this year. In fact, they have almost doubled the Standard Deduction rates! The rates are now as follows: $12,000 for single tax payers, $18,000 for heads of households, and $24,000 for married filing jointly.
Still think itemizing is your best bet? This tax season, it is in many people’s best interest to choose the Standard Deduction route since it can be quite difficult to surpass that $24,000. The Standard Deduction inflation is largely in part due to the IRS’s attempt to keep pace with the inflation rates and tax cuts.
According to the IRS, nearly 60% of tax payers choose Standard Deduction over itemizing. This is pretty good news for most; nearly doubling the amount of tax-free money you get! However, those who pay high property taxes may not be so lucky. Property taxes have been cut off at $10,000; it’s a win for some and a bit of a loss for others, but what do you expect when it comes to taxes? We all know it’s nearly impossible to please everyone. Especially when it comes to dealing with people’s hard-earned dollar.
People work hard for their money and want to see a significant return for the work they put in, but what about organizations? They have a ton of money to deal with and it can become quite overwhelming trying to manage taxes, cash flow and reconciliations. EOX Vantage wants to keep you afloat this tax season. Our tax and business experts will do all of the accounting work for you, so you can remain productive at work as well as have a good work/life balance.
Whether you’re doing your individual taxes, company taxes, choosing to file using Standard Deduction, or try itemizing your deductions, don’t stress too much because good weather and positive vibes are right around the corner!