What Do the Changes in Deductions Mean for You?
Changes in the tax rates are easy to understand, but much of the benefit of the tax reform is realized in changes to deductions. Deductions are often misunderstood by taxpayers, and are one area where there is more room for interpretation than one might otherwise expect with tax law. This leads to a level of complexity that many taxpayers find frustrating. They want to be fully compliant with the law, but also do not want to pay more in taxes than they are required to.
Fortunately, one rather significant change that will affect many people – and has the potential to greatly simplify their tax return – is an increase in the standard deduction. Although many people find it beneficial to itemize their deductions, it also significantly increases the complexity of their return and the amount of time it takes for recordkeeping.
To help reduce the complexity of returns, the Tax Cuts and Jobs Act almost doubled the previous standard deduction. For those who usually take the standard deduction, the nearly doubling of the standard deduction means a pretty clear lowering of taxes owed. For taxpayers who usually itemize, this increase may mean that they can take the standard deduction instead and have either lower or the same taxes as before without the headache of itemization.
Whole Story at TFX.