Hyden, Miron & Foster, PLLC Law Blog

Thursday, March 15, 2018

5 Things You Can Do Today to Plan for the 2018 Tax Season

Planning for tax season is never fun, but 2018 may be especially daunting because of the new tax changes that went into effect as of January 1, 2018. In fact, the changes that have already taken effect are the most significant revisions to the tax code that the U.S. has seen in the past 30 years. If you have specific questions about how the new laws will affect your taxes, or about taxes generally, it is a good idea to talk to an Arkansas tax law attorney to ensure you are on the right track for 2018.

Now is the perfect time to start thinking about what your taxes will look like for 2018.

  1. Take a look at the new tax brackets
  2. The tax brackets have changed, and tax percentages have been lowered for many filers. Some individuals may have been on the cusp of a higher tax bracket last year, but they may not face that challenge this year. If floating on the edge of a tax bracket was a problem for you in the past, especially as a higher income earner, take a look at the new rates. The IRS reports that most taxpayers will see income tax withholding changes by February 2018 to adjust for the new tax rates.
  3. Decide whether itemization is right for you
  4. The standard deduction for 2018 is increasing significantly, but that may not mean that you can avoid itemizing. You can start considering now whether itemization is in your future. Deciding whether to itemize will dictate which receipts or records you should keep throughout the year. Some of the most common expenses that warrant itemization include:
    • Medical expenses above 7.5% of your income
    • State and local taxes
    • Property taxes
    • Home mortgage interest
    • Charitable donations
    In 2018, the deduction for employee expenses and tax preparation expenses that are above 2% of your income has been eliminated.
  5. Start a 529 College Savings Plan
  6. A 529 College Savings Plan allows families to save to cover college expenses for their children. It is an investment account that is run by each state, including Arkansas. You contribute to it, and the funds are invested automatically on your behalf, which is similar to a 401(k) plan. Your investments can grow on a tax-deferred basis. Then, withdrawals are tax-free as long as you are using the money for qualifying educational expenses. Section 529 plans have been expanded for 2018. You can now use them for K-12 expenses in addition to college expenses. That means you can now use the funds for items such as tutoring or funding private school. If you have children, this is a great way to plan for their educational future.
  7. Develop an organizational scheme
  8. Throwing receipts in a shoebox gets the job done, but it can make your tax time stress even worse. Instead of waiting to organize everything when you are ready to file, develop an organizational system that works for you and classify records as you put them away. It takes very little time now, but it can save you hours and headaches at this time next year.
  9. Talk to a tax attorney
  10. If you have concerns about how the new tax bill is going to affect you, set up an appointment with Hyden, Miron & Foster, PLLC. Our team of tax law attorneys can walk you through what you will need to know for the upcoming tax year. Call today.

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