The Tax Cut and Jobs Act and 2017 Income Tax Returns
Filing your annual tax returns for any year can be a confusing process, but the last year has seen significant changes to the US tax code. Most of the Act’s provisions are effective starting with the 2018 tax year, but keep the following in mind when filing your 2017 income tax returns.
Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act, which was signed into law in late December 2017, introduced significant changes to the tax code. The IRS has needed some time to evaluate those changes and document them in their forms and instructions. To accommodate this need, tax season will start slightly later than it has in prior years. The IRS will start processing 2017 tax returns on January 29, 2018.
Otherwise, your 2017 return will not be affected by this legislation unless you qualify for the medical expense deduction. For 2017 and 2018, the medical expense deduction was modified to allow the deduction of medical expenses exceeding 7.5% of AGI for all taxpayers. In prior years, the threshold was 10% for taxpayers under 65, so some taxpayers may get a larger deduction for healthcare costs in 2017 and 2018.
Form 1095, including Form 1095-A, Form 1095-B & Form 1095-C, Showing Health Insurance Coverage
The Tax Cuts and Jobs Act did not eliminate the health insurance mandate for 2017 or 2018, so expect to receive a 2017 Form 1095 from your health insurance provider. Form 1095 comes in several different versions depending on where you get your health insurance. If you purchased your health insurance through the federal or your state’s health insurance exchange in 2017, Form 1095-A is required to prepare your income tax return.
However, if you can verify that you’ve been covered all year, Form 1095 is not required. Employer-provided health insurance appears on your W-2, in Box 12, Code DD. Your Social Security statement shows Medicare premiums deducted. Retirement statements may show a deduction for your health insurance premiums. You should still retain Form 1095 for your records, but it’s not necessary for filing your return if you can document coverage via one of these other methods.
New Fraud Concerns
The massive data breaches at Equifax, Uber, and Yahoo and several particularly challenging global computer viruses have exposed sensitive consumer data to the public sphere. School district and voter registration records were targeted by hackers, and social security numbers, financial information, and other personal details about a large segment of the US population were accessed.Taxpayers should be aware of an increased risk of tax fraud when sensitive personal data has been compromised.
You can find more detailed information about tax season scams in our article “Scammers Ramp Up Their Efforts during Tax Season.” However, the most important thing to remember is that the IRS will not initiate contact with you via e-mail or phone; they will start by sending a letter. In general, if you receive an email from anyone requesting personal information, like your social security number, your salary, your date of birth, or your address, you should delete it without responding.
New Withholding Tables for 2018
The IRS recently announced new withholding tables reflecting the changes to the tax code made by The Tax Cut and Jobs Act: https://www.irs.gov/newsroom/updated-2018-withholding-tables-now-available-taxpayers-could-see-paycheck-changes-by-february. Expect to see changes in withholding by mid-February. We’ll be working with our clients to ensure their tax withholdings are appropriate for their situation.
We are happy to help you file your return and to answer any questions that you have.
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Written By Melissa L. Spoharski, EA