A certain level of confusion comes with each income tax return filing season each year. But as taxpayers look over their returns under the effect of the new tax laws. Some tax deductions have been changed or erased all together, with new ones popping up. We have received many questions regarding these, as well as other tax issues. Below are a few answers.
1. How Will the Government Shutdown Affect My Income Tax Refund?
The longest government shutdown in our country’s history just wrapped up. It indeed did affect when you will receive your tax return – whether you have or haven’t filed yet. Check out our chart for when you will get your income tax refund by clicking here.
2. Why is My Tax Owed Larger?
One of the leading reasons tax bills have increased is that state income taxes may no longer be deducted on federal taxes. It’s great if you live in one of the over 40 states with an income tax. Those of in Texas are less keen on it. It basically means that states that don’t have an income tax picked up the slack for those who do. In this regard, the tax owed for Texans did not increase.
3. Why is My Income Tax Refund Smaller?
Less taxes paid is the reason for this phenomenon. For example, if you received a refund last year, it’s likely to be less this year. According to Business Insider, the average tax refund nationwide in 2018 was $2,727. The average income tax refund for Texans was between $2,901 and $3,200.
These refunds are likely to be less in 2019. This isn’t because tax rates have gone up. It is because the taxes you paid in have gone down. Remember, your tax refund isn’t money the government gives you. It is the money they owe you because you overpaid. They also don’t pay you any interest on the money they’ve been holding all year.
4. Should I Itemize?
To deduct or not deduct? This year, the standard deduction has doubled to $12,000 for individuals. It is $24,000 for joint filers. Those who are positive their deductions are less than this should not itemize in most cases. However, your tax pro can tell you which way is best for you before you officially file.
5. What are the New Business Income Tax Rates?
Businesses that are classified as S corporations, sole proprietorships, or partnership have a new tax rate of 20%. Under this new rate, pass-through businesses that take in less than the income limit of $157,500 if single or $315,000 in income if married have changes to make. You may be able to deduct 20% of your income in this circumstance. As an example, if your small business took in exactly $100,000 in profits, you may be able to deduct $20,000 from your income taxes.
Income Taxes in Houston
If your Houston family or business needs help filing your 2019 income taxes, contact us.