Changes to Tax Filing Regulations – Confusion for Tax Payers
If you are someone who has filed their own taxes for many years, you may find it difficult to file them this year on your own. There are a lot of changes that have been made to the deductions and credits that people are able to file for this year.
It’s important to make sure that the letter of the law is followed when filing taxes to decrease the chances of the IRS auditing you later on for improper filing. The following guide walks you through a few reasons why you may want to hire a tax professional to help you file your taxes in Hawaii this year.
Child Tax Credit Has Increased
For many years the amount that someone would get back for a child was only $1000 per child. The tax changes have increased the amount of the credit to $2000, which is quite a significant increase for most families. You want to be sure that you file this credit correctly to ensure that you get the full $2000 you are owed if you have children.
Home Mortgage Interest Deduction Limits Have Decreased
When you own a home, you can claim a deduction for the interest assessed on your mortgage payment. For many years the amount that could be was up to $1,000,000. This year, the max amount that can be deducted has lowered to $750,000. While this won’t affect average families, it can greatly affect those who own some large properties that have mortgage loans with high interest rates.
Meal and Entertainment Deductions Are No Longer Acceptedfor Many
Many companies like to wine and dine their clients to bring in new business. Many people take clients they are trying to acquire out to dinners, to see plays or to enjoy other forms of entertainment.
In the past, these types of expenses were considered company expenses and were deductible when filing taxes. The recent changes are making it impossible to deduct these activities from your taxes because they are seen as lavish and is a change that is hitting a lot of companies hard. If you attempt to claim meal and entertainment expenses in your deductions, it could result in you being audited for filing improper deductions.
Gas Costs Are Still Deductible for Some Businesses
The cost of gas is an expense that most companies cannot avoid. These costs are still deductible for most businesses, but the regulations have become more stringent on proving that the gas was used for business purposes.
It’s best to document where you travel in a day and how much gas you use so that you can prove that the gas was based on company usage. Failure to prove that you used the gas for a work outing could result in the deduction being denied. Just because you file a deduction, it doesn’t mean the IRS will accept it.
Many Tax Forms Have Changed
To make filing taxes easier, many of the tax forms that have been used in the past have changed. If you don’t educate yourself on the changes that have occurred, there is a good chance that you could make a mistake when you file your taxes. The forms are designed to be easier to comprehend, but with less red tape, there are more questions arising for those attempting to file their taxes themselves.
Not All States Are Conforming to the Changes
Unfortunately, there are some states that are choosing not to conform to the changes with it comes to filing your state taxes. Hawaii tax relief for example, is different when filing for your state taxes than your federal taxes. If you don’t know the difference between the two, there is a good chance that you could accidentally file improperly.
Claiming Others Has Become Easier
If there are members of your household that you want to claim on your taxes as dependent, the process has become a bit easier. There are many changes that have made it possible to claim someone as a dependent and get $500 credit for them living in your home if you can prove that they are dependent on you and they don’t claim themselves on their taxes. If the person is under 18, doesn’t earn an income or is disabled, you may be able to claim them on your taxes as a dependent even if they aren’t directly related to you. A tax professional can give you advice on who can and cannot be claimed as a dependent.
Making Changes Once You File Can be Difficult
If you file your taxes and realize that you made a mistake later on down the road, it can be difficult to be able to make a change to your filling. There are a lot of steps that have to be taken in order to make the change and figuring out the legality of the situation will be easier with the help of a tax professional.
Some Deductions Aren’t Easy to Assess
There are many deductions available to taxpayers. There is a good chance that you could overlook a deduction that you qualify for and end up missing out on the ability to save some money when you file your taxes. A tax professional is highly educated on all of the changes in the laws regarding tax filing and can help you determine what other deductions may be available to you and what steps you need to take in order to be able to file for them.
It’s best to have a Hawaii tax relief professional handle your tax filing for you to ensure that everything is filed properly. Many of the changes are very complicated and will take a lot of time to figure out on your own. Since so many deductions are no longer acceptable and new ones are available, hiring a professional betters your chances of everything being done properly in the end. Most tax professionals charge very reasonable rates for their services if your taxes aren’t overly complicated to file. Many tax professionals allow you to come in for a consultation and get an estimate of what your filing will cost before actually having your taxes filed.