4 Calculators That Show How The New Tax Law Will Affect You
Despite the government shutdown that briefly derailed the work of the Internal Revenue Service, Americans still have to pay taxes. But, for some, President Donald Trump's 2017 Tax Cuts and Jobs Act has only added to the confusion. To help, here are some calculators that estimate how the new tax law affects your filing.
Tax refunds are already lower this year, according to statistics released from the IRS comparing this time last year to the present. But experts say that since it's early in the tax season, we can't know for sure if the decrease in tax refunds is an overall trend yet.
Even though the 2017 tax bill may have made this latest tax season a bit more complicated, it's important to pay your tax bill on time. According to the IRS, there's the possibility of two penalties for late taxes — late filing and late payment. Interest — the rate for borrowing money — can also accumulate, according to the agency.
It is possible to file an extension, according to U.S. News & World Report. An extension must be filed by April 15, which is the same date for the 2018 tax return filing deadline, according to the IRS.
The Tax Foundation's Calculator
The Tax Foundation is the "nation’s leading independent tax policy nonprofit" since its founding in 1937. This calculator allows you to create a custom scenario (say you're own tax situation, maybe?) or use a preloaded one with the name "Jason," who is single with 2 children and makes $52,000, or Joe and Ethan who are married but retired with an income of $48,000.
Plus, the nonprofit's calculator is streamlined and easy to read.
"With the passage of the Tax Cuts and Jobs Act (TCJA) in late 2017, many Americans are wondering what will actually happen to their tax liabilities when they file their 2018 taxes in early 2019," according to the Tax Foundation. "We've created a tax calculator that should help most Americans determine how the TCJA will affect taxpayers in scenarios similar to their own."
TurboTax's Tax Reform Calculator For Educational Purposes
It's got a long name, but this tool from taxing software giant TurboTax lets you look at how the tax overhaul affects your individual state. "We are helping taxpayers understand their total tax picture," certified public accountant and TurboTax tax expert Lisa Greene-Lewis told USA Today.
Because of the changes in tax laws, different states may be affected differently, something the tool highlights. For example: "In California, an average taxpayer will get an estimated $900 more in their pockets throughout the year," according to TurboTax.
The tool is supposed to try to demystify how tax reform will affect an every day person's return, USA Today reported. "The calculator should be used as an educational tool that allows taxpayers to easily get a deeper understanding of how the new tax law impacts taxpayers with similar situations," Greene-Lewis told USA Today.
TurboTax also has a tool called TaxCaster to estimate your return.
Nerdwallet's Interactive Walkthrough
Nerdwallet is a financial website that aims to give its readers "tailored advice, content and tools" — and that includes the Nerdwallet federal income tax calculator. It's an interactive tool that walks you through the basics of calculating your federal income tax. Then, because it's a financial advice website, Nerdwallet also gives suggestions for the tax software that might be best for your particular situation.
H&R Block's More Detailed, Interactive Tool
H&R Block — the ubiquitous tax preparation service — also has an interactive tool on its website. "H&R Block's 2018 free income tax calculator is a simple tool to help you easily estimate your tax refund or how much you'll owe, plus the impact of tax reform on you," according to H&R Block's website.
It's a bit more detailed than Nerdwallet's tool. This tool also will analyze the impact that the tax bill had on your filing, after you fill out the initial quiz. Then the company offers online filing through its own service or helps in finding an H&R brick-and-mortar location.
Remember, taxes are due Monday, April 15.