​Answers to Commonly Asked Tax Questions

Answers to Commonly Asked Tax Questions

With all of the headlines about the changes in the Tax Cuts and Jobs Act (TCJA), you probably have lots of questions. Here are answers to some of the most common questions taxpayers have this year.

Question:

I'm hearing a lot about changes to 2018 taxes. What should I do?

Answer:

The simple answer to the question "What should I do?" is to not make any major changes until you finish filing your 2017 taxes. Once you understand your 2017 tax obligation, you are in a better position to plan for 2018.

However, there are a few things you can start thinking about now. Depending on where you fall in the new income tax brackets, you may want to consider ways to lower your taxable income. This could include increasing your contributions to 401(k) retirement accounts or health savings accounts (HSAs). You'll also want to make sure your employer has adjusted your federal tax withholding so that you don't have a large refund (or tax bill) next year. You can review your pay stub withholdings using the IRS withholding calculator (just be aware the calculator may not be accurate for every person's situation).

TCJA Questions

Question:

What is the penalty if I didn't have health insurance in 2017?

Answer:

The penalty per adult is calculated as the greater of either $695 or 2.5 percent of your yearly household income, up to a maximum of $3,264 for individuals or $16,320 for a family of five or more. Note that the penalty is still in place for tax years 2017 and 2018. The TCJA eliminates the penalty for 2019 through 2025.

Question: 

Is Social Security taxed?

Answer:

It depends. You won't pay tax on more than 85 percent of your Social Security income, but how much gets taxed depends on your income bracket. If your combined income is less than $25,000 for the year, you won't pay any tax on Social Security income.

Question:

When is the last day to file my taxes?

Answer:

Technically, Tuesday, April 17. But don't wait until the last minute. Ask for help to get started now, or to file an extension so you have time to complete your tax return later. The sooner you file, the sooner you can get your refund. Refunds usually take about three to six weeks to arrive from the date you file. And remember, you need to keep most tax-related documents for at least three years, so don't toss your paperwork after you file.

Question:

The IRS contacted me, what should I do?

Answer:

Ask for help. There are numerous scammers who impersonate the IRS during tax season. The real IRS will never contact you via social media, email or text message. In addition, an IRS agent will not contact you over the phone unless you first receive official correspondence in the mail. If you have received a notice in the mail, immediately ask for help to determine how to proceed.

These are just a few of the questions people have during tax season. If you have more, please give us a call.

Bill Hampton, CEO

Hampton Tax and Financial Services, LLC

Tel: 404-482-3170

Website: www.HamptonFinancialLLC.com

Connect with me: www.LinkedIn.com/in/BillHamptonFinancialAdvisor