Calculate Whether You Should Go With The Standard Deduction Or Itemize
When it comes to deductions, here is the key question you want to ask yourself: “Do my deductible expenses for 2017 exceed $6,350, the standard deduction for all single taxpayers ($12,700 if I am married and filing jointly)?” If the answer is “No,” then great, you’ve just saved yourself a spreadsheet — or five.
But don’t sell yourself short. For 2017 many items are eligible for deduction including charitable donations, state tax, moving expenses, disaster and theft losses and so on. These can really add up.
“Most people use the standard deduction — and it’s certainly easier, but it’s a good idea to run those numbers and see what you have. Because why take a $6k deduction when you can take $8k?” says Perlman.
Don’t Forget Your Personal Exemption(s)
You’ll also want to remember to factor in that everyone gets a personal exemption of $4,050, and this includes your spouse and any dependents, so if you have those, you can claim them for additional personal exemptions. This exemption will not exist when you file next year for 2018, so be sure to take advantage of it while you can. The online tax calculator may already factor this in, but it’s something to look out for, especially if you have dependents.
If You’re Uncertain, Hire A Pro
If you’ve been doing your taxes for a while and not much has changed in your life in the last year, you should have a good idea of what these numbers on the tax estimator calculator should be; but if you’re new to this all, you may be feeling less certain. If you have any questions, you should really hire an expert, even though unlike in years past, when you go to file your taxes in 2019 for the present year, you will not be able to deduct tax prep services.
“It may make sense to go to a professional,” says Coombes. “A CPA is one kind of tax professional, but tends to be more expensive than an enrolled agent who will also know the ins and outs.”
Coombes also recommends diving into the belly of the beast, aka, actually looking at the IRS Tax Form 1040, the official filing document. “I think it scares people, but I encourage them to just look at it,” says Coombs. “It gives you a very clear sense of what you need on hand and how taxes work.”
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