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Doing taxes is never fun.
Just ask anyone who has to file their taxes (even the tax professionals are happy when the season is over).
2018 marked unprecedented changes in the tax code. This was the largest overhaul in over 20 years.
The goal was to simplify the tax code and get more money back in the hands of the average taxpayers.
While the prudent thing to do was to use a tax calculator to see how the 2018 tax code changes would affect your personal situation. Many people didn't, but happily enjoyed more money in their paycheck (since less taxes were withheld).
Honestly, the end results are mixed. From what I have seen in our personal situation and those around me, I don't know if they reached their goal. The media is reporting IRS tax refunds are down 8-16%. However, the tax season isn't over, so that number will fluctuate until most of the tax returns have been filed.
If your tax return is smaller than anticipated, you will learn 10 ways to overcome it.
Biggest Tax Changes in 2018
So, the biggest tax changes were meant to simplify the tax code. But, the question still remains…how will it affect you?
This is just a highlight of the biggest tax changes in the tax code for 2018. Find an extensive list of all the changes.
Lower Number of Tax Brackets
The number of tax brackets were modified from 7 down to 5.
|2018 marginal tax rate||Single (S) and Married
Filing Separately (MFS)
|Married Filing Jointly||Head of Household|
|37%||Over $500,000 (S)
Over $300,000 (MFS)
|Over $600,000||Over $500,000|
|2017 marginal tax rate||Single||Married Filing Separately||Married Filing Jointly||Head of Household|
|39.6%||Over $418,400||Over $235,350||Over $470,700||Over $444,550|
In an effort to make taxes easier for the average person to file their taxes, the tax code plan was to streamline the deduction rate.
The standard deduction was increased to $24,000, which was significantly higher than before.
What many people are learning is that now they are unable to itemize deductions they are used to. For instance, the threshold is too high to itemize for mortgage interest deductions (which is now capped at $10K) and charitable donations.
Thus, it makes itemizing deductions irrelevant for millions of Americans.
Self Employed & Small Businesses
The changes were extensive for anyone running a small business or self employed. Plus all of the changes were the last things for the IRS to figure out.
It is imperative to stay up to date on all of the information. Here are tax tips for self employed.
Why A Smaller Tax Refund?
There are so many pieces that go into filing your taxes that is hard to pin point it down to one thing.
Above are all reasons for a smaller tax refund.
A positive reason for a smaller tax refund is an increase in your income. Also known as, you have to pay more in taxes, too.
Many times a small $100 increase in your paycheck will push you over into the next tax bracket.
Regardless of all of that… if your tax return is smaller than anticipated, here are 10 ways to overcome it.
Simple and Easy Strategies to Lower Grocery Budget.
One of the quickest ways to reign in spending is to spend less on groceries and eating out.
Ready for a Spending Freeze?
With a smaller tax refund, a spending freeze can quickly get you on track with money saved. Can you do a month?
How to Save Money Fast - Save $1,000 in a Month
Time to save money and FAST! A lower tax refund can hurt your personal finances, but stay on track with 60+ ways to save money fast.
How to Overcome When Ends Don't Meet
Were you anticipating that tax refund to get ahead of your bills? Now, that your tax refund is smaller, here are ways to help you overcome living paycheck to paycheck.
The Ultimate Guide to a Frugal Lifestyle
A frugal lifestyle will help save money that you anticipated with your tax refund. It doesn't have to be forever. Just pick up a few frugal living ideas and start there.
7 Things to Give UP to Pay Off Debt Faster
If you planned to pay off debt with your tax refund, don't despair. There are plenty of ways to still pay off debt. Pick up one of these things to give up to become debt free.
15 Things We Gladly Gave Up To Become Mortgage Free
What is the point of paying mortgage interest if you can't deduct it? Learn how to become mortgage free.
The Best Methods of Budgeting You Need to Know
Enough putting off learning how to budget. Now is the time! Figure out which budgeting method will work for you.
What to Do with Old Stuff (& Make Money)
The average American house can plenty of extras. Look around and see what you can sell. Easy ways to make extra cash today!
Meal Planning 101 (plus save money each week)
Let's fact it... meal planning will help you lower your grocery budget. Figure out how to recoup a smaller tax refund by cooking at home.