Tax credits, deductions we may have overlooked for 2018 filing season
This is one of the most complex tax seasons in years.
It’s that time again!
Given we’re facing one of most complex tax seasons in recent years, here’s a review of some tax credits and filing hints.
The standard deduction for single folks has almost doubled from 2017 — now $12,000, up from $6,350; and for married couples, $24,000, up from $12,700.
Tax credits not only reduce the amount of taxes owed, but can result in a refund. Fingers crossed!
Child tax credits increased to $2,000 per youngster, up from $1,000 in 2017; and there’s a new $500 credit for children over 17, which ends when they turn 18. But if children go to college, parents become eligible for the $2,500 Education Tax Credit, among others.
The earned income tax credit is another form of relief. It benefits millions of taxpayers by putting more money in our pockets. Visit the website IRS.gov/eitc or use the EITC Assistant tool on IRS.gov for more information.
Many people became eligible for this credit in 2019 for the first time, particularly if family or financial situations changed. Based on income, family size and filing status, the maximum amount of EITC for the past tax year is:
$6,431 for families with three or more children
$5,716 for families with two children
$3,461 for families with one child
$519 for families with no children
Millions of taxpayers don’t claim the EITC because they don’t think they’re eligible. Philadelphia residents can text FILE to 99000, visit www.YouEarnedItPhilly.com, or call 215-686-9200 to get more information on the EITC and a list of locations offering tax-preparation services throughout the city.
Others eligible for this valuable credit? American tribal communities, working grandparents raising grandchildren, taxpayers with disabilities, parents of children with disabilities, active duty military and/or veterans, and health-care and hospitality workers.
Finally, the mortgage interest deduction. You may not have received a Form 1098 for your mortgage interest (I didn’t), but you can still deduct it. Call your bank or mortgage company to find out the proper amount to deduct, for mortgages up to $750,000. The limit for state, local and real estate tax deductions, commonly referred to as SALT, is capped at $10,000.
Free tax help from volunteers
The IRS works with community organizations around the country to offer free tax preparation. Volunteers prepare taxes for people with low and moderate income and can help determine if you’re eligible to claim the EITC. There are two IRS-sponsored programs:
Volunteer Income Tax Assistance: or VITA, offers free tax return preparation to eligible taxpayers who generally earn $55,000 or less.
Tax Counseling for the Elderly: or TCE, is mainly for people age 60 or older but offers service to all taxpayers. The program focuses on tax issues unique to seniors.
VITA and TCE sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations across the country. To locate the nearest VITA or TCE site near you, call 800-906-9887.
Many TCE sites are operated by the AARP Foundation’s Tax Aide program. To locate the nearest AARP TCE Tax Aide site, call 888-227-7669.
Most military bases offer free help for service members, and anyone who does their own taxes can use IRS Free File. Free brand-name software will figure out your taxes automatically. Visit the website: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free.
IRA Contributions until April 15
We have until April 15 to make retirement account contributions, which are also tax deductible.
Generally, taxpayers can contribute up to $5,500 to an IRA for 2018. For someone who was 50 or older at the end of 2018, the limit increases to $6,500. Here are additional details:
Single or head of household filers with income of $63,000 or less can take a full deduction. If you make more than $63,000 but less than $73,000, you get a partial deduction; if your income is over $73,000, there is no allowable deduction.
If you’re married and filing jointly (or a widow/widower) with an income of $101,000 or less, you are eligible for a full deduction. If your total income is more than $101,000 but less than $121,000, you can claim a partial deduction; if your income is $121,000 or more, there is no deduction.
For joint filers in situations where the person making the IRA contribution is not covered by a workplace plan but their spouse is covered, a full deduction is available if their modified AGI is $189,000 or less. There’s a partial deduction if the total income is between $189,000 and $199,000, and no deduction if income is $199,000 or more.
If you’re married but filing separately and have an income of less than $10,000, you can claim a partial deduction. If your income is at least $10,000, you many not claim a deduction.
Those who have already filed can use the “Where’s My Refund?” tool offered by the IRS to track their refund. It displays progress in three stages: return received, refund approved, and refund sent. Alternatively, call the IRS refund hotline at 800-829-1954.