2018's tax season is winding down and for people lucky enough to have retired already, they have a few things to keep in mind that may be different than last year given all the new tax laws.
According to TurboTax, the new tax law nearly doubles the standard deduction amount. Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes (the ones you file in 2019).
Married couples filing jointly see an increase from $12,700 to $24,000. These increases mean that fewer people will have to itemize. Today, roughly 30% of taxpayers itemize. Under the new law, this percentage is expected to decrease.
Tracy Byrnes and CPA and TurboTax tax expert Lisa Greene-Lewis zero in on a few differences among those folks.
Greene-Lewis points out that retirees who have side jobs need to think about how to make their social security income taxable. Typically, if you just have social security income, that may not be taxable, but withdrawing from your retirement now or doing a side job could, in fact, make that income taxable.
Greene-Lewis also says, "a lot of them have paid down there their mortgage, so they don't have a big write off for mortgage interest. And especially now that they may move into the standard deduction...When that happens, they should remember that they could do a contribution of a qualified charitable distribution directly to a charity and then they will be able to deduct that and it's up to a $100,000."
For more on last minute tax deductions you're not taking advantage of, catch our full webinar with TurboTax here.
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