Public should be aware of tax changes

PRESCOTT – It’s tax season.

For those getting refunds, it’ll be good news, for those owing, it’s bad news and for those who don’t owe and won’t be getting a refund, it’ll be a relief to have it over with.

However, Carl Dalrymple, Jr., with Dalrymple/Crain Accounting, warns those getting refunds to be patient because there could be delays due to the recent partial shutdown of the federal government, and the possible second shutdown, which has been threatened.

For the most part, the changes won’t be terribly bad for the majority. Capital gains tax remains unchanged, and farmers and ranchers can still take their depreciation deductions off equipment and could qualify for a break under the new laws that allow up to 20 percent of $20,000 profit to be taken as a write off. This deduction applies to partnerships, individuals and S Corporations, but can’t be taken by professional people, such as doctors, lawyers or accountants.

Those who donated to the Razorback Foundation for tax deductions will be disappointed to learn their donations can’t be deducted any longer.

Employees who took deductions for mileage will no longer be able to do so, unless they’re self-employed. On the other hand, the standard deduction for married couples almost doubled, going from $12,700 last year to $24,000 this year, but the problem, Dalrymple said, is, they lose some of their personal deductions until 2025. In 2017 a person had to have 10 percent of their adjusted gross income in medical expenses to take a deduction, but that figure has dropped to 7.5 percent.

According to Dalrymple, anything over $10,000 can no longer be deducted when it comes to real estate, property or state income taxes. However, families can take child care credit up to $2,000 per qualifying child, and there’s a new non-refundable credit of $500 per child. This, he said, can cut a family’s taxes, but they won’t be getting refunds.

The earned income credit has changed. The maximum for a family without children is $529, while a family with one child can qualify for $3,526 but can’t make more than $41,094.

Those who get divorced in 2019 and are required to pay alimony will be disappointed to learn they can no longer take alimony payments as a deduction. On the other hand, those who receive alimony no longer have to claim it as income, he said. This only applies to those who were divorced after Dec. 31, 2018.

One of the headaches for tax preparers, Dalrymple said, is the state and federal forms differ. While employee deductions aren’t allowed on federal returns, they are on state returns.

“It’s confusing,” he said. “We get changes every day, several times a day on the changes in tax laws. Wage earners who do short forms and only use a W-2 could get more back, but those who itemize could get less. We want everyone to pay their fair share of taxes, but not what they don’t owe.”

He said because of hackers, his office has had to take out cyber insurance policy. This helps protect him and the business’s clients.

In discussing the changes in the tax laws, he said it’s hard to answer questions when you’re not sure of the answers because of the constant changes being made. He suggested people make sure they have all their income and deductions together before bringing the paperwork to their accountant or tax preparer.

Again, he reminds everyone to be patient when it comes to their returns because there could be some delays.