It's a new year and a new tax season. Tax preparers have been filing since the first of the year, and local Jackson Hewitt offices have been busy.
"I think that's reflective of the economy," said Bruce MacKinnon, Office Lead for Jackson Hewitt Tax Service. "People are doing better financially and probably have slightly more complex tax situations, so they're coming through our doors and we're here ready to help."
He says one of the biggest changes this year is the penalty for not having health insurance is gone.
"So for people without health insurance, they're not having to make that additional payment," he said. "It was $695 per adult and $395 per child. That can really add up; think of a married couple with two or three kids, that was a very sizable hit for them."
All of the tax brackets have been adjusted and standard deductions and credits have gone up slightly - those are adjusted every year for inflation. The threshold for deducting medical expenses went down.
"It used to be 10 percent of your income, they reduced that to 7% percent, so you don't need as much medical expense before you can take a deduction," MacKinnon said.
Some tuition credits have been extended, and there's a change involving IRA distribution.
"Another major change affects people turning 70 and half this year," MacKinnon said. "They're no longer required to take their required distribution from individual retirement accounts , that has now been deferred to age 72, so that's a big change for people in that age range.
The one piece of advice that applies to everyone, he says, is to file by the deadline, even if you owe - the IRS will set up payment plans.
"The worst thing you can do is not file, don't ignore it," MacKinnon said. "The IRS is very helpful in assisting taxpayers in that situation and making payment arrangements. They will routinely allow a payment arrangement at a reasonable interest rate, and if you want to spread the payments over six years they are very willing to do so."
Another tip? Think about contributing to your IRA in the next few months.
"If you do have a tax liability this year, or are expecting a balance due you can make a contribution to an IRA up to April 15th and have that deducted directly out of your 2019 taxes," MacKinnon said. "That reduces your income before taxes are calculated."
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