It is sad to say but the end of the year is right around the corner. The last time I looked we are only about 9 weeks away until 2019. During this time everyone is busy with the holidays (Halloween, Thanksgiving, and Christmas). This is also a great time to think about tax planning, especially because of the new tax law of 2017. If you receive a W-2, it is likely you have seen an increase in the net pay you get due to the change in the federal tax withholding tables. It is a good idea to take a look at your federal withholding taken out to date to make sure it will be enough. We have done some planning for clients and not enough federal withholding has been taken out to cover the total tax. If this is your case you still have time to adjust the withholding for the last couple months of paychecks.
Another change for 2018 is the increase in the child tax credit, which is a great thing for families with kids under 17. In the past the taxpayers under the income limit could get a $1000 credit per child. This credit was limited if you met the income limit or it was even phased out completely. Starting in 2018 the credit went up to $2000 per child under 17 and the income limit increased to $400,000 for married filing joint taxpayers, allowing more taxpayers to qualify for the credit. In the past, taxpayers were not eligible for a tax credit for dependents over the age of 17. Starting in 2018 taxpayers are eligible for a $500 nonrefundable credit for each of those dependents. If you have grandparents or parents and you are providing more than half their support, now you can claim them as a dependent and get a $500 tax credit.
These are just a couple of the changes that were included in the tax law. If you have questions please consult your tax advisor.
Michelle Minnerath, Past President
Ketel Thorstenson, LLP