It is now time once again to file our individual tax returns, and changes in the tax laws over the last two years have made that challenging. Tax law changes have been initiated to simplify the filing process but transitioning to the new laws is complicated for those of us who are used to filing under the old rules. In 2018, the Tax Cuts and Jobs Act (TCJA) put more money into the pockets of many Americans by lowering tax rates and increasing the standard deduction. The federal tax rates range from ten to 35 percent, and standard deductions are approximately double what they were two years ago.
The state of Arizona has made several changes to the 2019 tax regulations that impact individuals, including a significant increase in the standard deduction that can be taken at the state level. Now, the standard deductions for state purposes are comparable to those from federal purposes. This means that many people who take a standard deduction on their federal 1040 will also be able to take the standard deduction on their Arizona Form 140.
Many members of our Grand Canyon University community give generously to charitable organizations. Charitable contributions to qualified organizations are deductible, subject to certain limitations. Information on the deductibility of charitable contributions, qualified organizations and limitations can be found on the Internal Revenue Service (IRS) website.
When the TCJA increased the standard deduction, there was an unintended consequence impacting charitable donations. Charitable contributions are deductible for taxpayers that itemize deductions, but those who take the standard deduction no longer get a tax benefit for donating. The state of Arizona has recognized this issue and has provided an incentive for taxpayers to keep contributing to qualified organizations. The Arizona standard deduction can be increased by 25 percent of the charitable contributions that would have been deductible on the federal return if the taxpayer had itemized deductions. For more information on the 2019 Arizona state tax changes see the Arizona Department of Revenue website.
There are many software programs that can help you navigate preparing your federal and state income taxes. If you have a complicated return, you should consider seeking the help of a professional. Accounting professionals that may specialize in taxation include Certified Public Accountants (CPAs) and IRS Enrolled Agents (EAs). You can find a CPA through your state board of accountancy, or you can search for an EA on the IRS website.
Many taxpayers qualify for free tax help through the IRS. Consider using the myfreetaxes.com website to get step by step guidance through filing your tax return. Myfreetaxes.com is available to taxpayers who make less than $66,000 annually. Do you still need more help than that? Taxpayers that have less than $56,000 in gross income may be able to get their taxes done for free at a local Volunteer Income Tax Assistance (VITA) site. Volunteers undergo IRS training and are supervised by appropriate personnel as they prepare your tax returns. To find out more about these resources, please visit the IRS website.
Now you should feel more prepared to face the April 15th deadline. Don’t spend your refund all in one place!
At Grand Canyon University, we are focused on giving each of our students a quality education that will support their career goals. If you’d like to learn about GCU’s MBA in accounting, then visit the Colangelo College of Business or click the Request More Information button on this page.
The views and opinions expressed in this article are those of the author’s and do not necessarily reflect the official policy or position of Grand Canyon University.