The deadline for filing our federal tax returns is a little over a month away and many Iowans are finding recent changes in tax law are hitting their bottom lines.
Bob Berger, a CPA in Omaha/Council Bluffs, says most of the itemized deductions for business expenses have vanished. “Employees should talk to their employers about reimbursing some of those things that they haven’t normally done, like auto travel, business meals and business travel,” Berger says. “If they’d taken that normally themselves on their tax return, it may be worth talking to your employer and actually taking a cut in pay in order to have them reimburse those expenses because those expense reimbursements are not taxable to you.”
Federal changes late in 2017 meant many of us got more in our paychecks starting in January, which may not necessarily be a long-run tax benefit. The IRS released new withholding rates in mid-January, which also changed the picture.
“They’re refunding a little bit more to you and they’re not withholding as much and that may not be the right solution for all taxpayers,” Berger says. “The IRS came out with a new online calculator and it’s real easy to find. You just do a search for ‘Withholding Calculator 2018’ and the IRS website will come right up for you.” He says to plug in your numbers and determine if you should give your employer a new W-4 to withhold more from your monthly paycheck.
Many Iowans who are using a home equity line of credit to buy cars and to make other big purchases are finding the interest on those payments will no longer be something they can write off. “You don’t get that deduction for that home equity line of credit,” Berger says. “Those people that are used to taking that and realizing the tax savings, it’s no longer going to be available to them. They might want to consider refininacing that line of credit into their home mortgage because then it would qualify.”
The federal tax deadline is April 17th this year as the 15th falls on a Sunday.