77% of Americans are unaware of major tax changes – The Fool Motley

It's known that the tax code has one thing, it's complicated. And for the average American, it's probably not that interesting. As such, many tax filers may not have a thorough understanding of our tax system, and this is understandable.

But while that's OK do not Knowing the subtleties of the tax code, it is important to know the basics. And in this respect, most Americans have their work cut out for them. In fact, about 77% of respondents are unaware of the major changes to the tax code that came into effect last year, or have found GOBankingRates in a recent survey.

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Specifically, only about 18% of participants were able to correctly identify the standard deduction that individual taxfilers could claim this year on their 2018 taxes ($ 12,000), while 10% of Americans knew that 39, there are now seven individual tax brackets. If you are in the dark about taxes after the massive redesign of 2018, here are some key points you should know when you sit down to prepare your statement.

1. It may be more logical to detail

Depositors have two options to take deductions on their taxes: go with the standard deduction, or itemize. If you own a house and you have other expenses to deduct, then you can assume that the description makes sense. However, the 2018 overhaul almost doubled the standard deduction. Prior to 2018, it was $ 6,350 for single filers and $ 12,700 for married couples filing together. But for the 2018 taxation year, this is $ 12,000 for singles and $ 24,000 for joint filers. As such, you may find that the details will not do you any good this year.

2. Your refund might be smaller this year

Another major impact of the fiscal redesign of 2018 has been the lowering of virtually all individual tax brackets. Your tax bracket determines the amount of tax you pay on your highest income, and one of the main goals of the 2018 redesign was to put more money into the pockets of the Americans. As such, the IRS issued new payroll deductions that determined the amount of tax that employers had to withhold on workers' paychecks.

In 2018, many people saw their net pay rise. The other side of the coin, however, is that many will inevitably see smaller repayments than before, since much of the money they normally received at the time of the tax was in fact already paid out to them. year.

If you see a large increase in your paychecks without getting a raise, your refund will not be as great as in the past. You could even finish of the IRS a little money, depending on your situation. For example, if you do a lot on your investments or earn a good income through a parallel job, and you have not paid the estimated tax on that money last year, you risk find yourself with a lower payment for 2018.

3. You may need professional help (tax)

The tax code has always been heavy and the redesign of 2018 has not helped much. If you are self-employed, own a small business or have multiple sources of income, you may find that your tax return is even more complicated this year than ever before. And if that's the case, you should not hesitate to hire a tax preparer. If you act alone and make a mistake, your tax return may be marked for audit or rejected immediately. And these are headaches that you do not want to deal with.

The fact that most Americans are not aware of the tax changes is not surprising, but this could be problematic in terms of the correct production of tax returns. Therefore, give yourself enough time to do your taxes. Waiting until the last minute may have worked, but this year the last thing to do is to take risks.