Tax Reform—What it Means for You
Make sure you understand how you're impacted by these changes to the tax system.
You've likely heard that Congress recently passed the most significant tax reform in 31 years. With limited exceptions, most of the new tax law provisions became effective on January 1, 2018, and will not affect your 2017 taxes. The tax law changes do prompt a variety of new considerations for 2018 tax filings.
The impact of these changes will depend on your individual situation. Understanding the new tax law can be confusing, but it's important to be informed and find a trustworthy source, such as an accountant or tax advisor, to answer your questions.
Tax Changes That Affect BECU Members
As a BECU member, you will see changes in interest deductions related to our mortgage and home equity products, tax rates, standard deductions and more.
Changes to Employment Taxes
If you are employed, you will experience tax changes that include modifications to your personal exemptions, tax brackets and withholdings. The list below provides an overview of the general changes that will affect employment taxes.
- Moving Expenses: With the exception of Armed Forces by Military Order, the Moving Expense deduction has been eliminated.
- Education Reimbursements: If your employer offers education reimbursements, the new tax law provisions will affect how these reimbursements are managed.
- Withholdings: The IRS has introduced new withholding tables. Based on these new tables and where you fall within the revised tax brackets (see below), you may see a decrease or increase in your federal withholdings very soon.
- New Tax Brackets: The tax overhaul also introduced new tax brackets. Because of the new brackets and thresholds, you may see a slight decrease or increase in the amount of taxes taken out of your paycheck, and therefore an increase or decrease in your net pay.
- Personal Exemptions: Previously, you could deduct $4,050 per person (self, spouse, and dependent children) claimed on your tax return. These personal and dependent exemptions have been eliminated. To help determine your withholding, the IRS is revising the withholding tax calculator on IRS.gov, which is anticipated to be available by the end of February. The IRS is encouraging taxpayers to use the calculator to adjust their withholding once it is released.
The IRS is also working on revising the Form W-4. Form W-4 and the revised calculator will reflect additional changes in the new tax law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions.
We realize that it may not be easy to determine what these changes mean for you. Make sure to rely on accurate information as you seek to understand how you are affected. This tax briefing, Tax Cuts and Jobs Acts prepared by Wolters Kluwer, provides a side-by-side comparison of the law, as it was before the recent changes, as well as a breakdown of the changes that come with the new tax law. (Note: Chrome browser works best for viewing this document.)
If you have questions about how the tax changes affect your circumstances, we encourage you to talk with a tax advisor. If you don't have a tax advisor, you can visit the TurboTax Tax Reform Center for additional information and tax support.
Please be assured that BECU is prepared to help you with products and services that meet your needs as you navigate these changes.