Last-minute tax tips for your federal income taxes

This article was fact-checked by our editors and reviewed by Christina Taylor, MBA, senior manager of tax operations for Credit Karma. It has been updated for the 2019 tax year.

So whether you’re e-filing your own taxes for the first time, are a veteran tax DIYer or use a professional tax preparer, it’s important to understand how tax law changes could affect your federal income taxes. Let’s look at some things to keep in mind as you prepare to file your return.

Standard deduction or itemizing?

The Tax Cuts and Jobs Act nearly doubled the standard deduction amount for all filing statuses. For 2019, the standard deduction amounts are …

• $12,200 for single filers or married couples filing separate tax returns
• $18,350 for those filing as head of household
• $24,400 for married couples filing jointly and qualifying widow(er)s with a dependent child

There’s an additional standard deduction if you (or your spouse if filing jointly) are 65 or older, or blind.

If you’re considering itemizing deductions, the higher standard deduction may mean your total itemized expenses no longer exceed the standard deduction amount for your filing status. If that’s the case, it may not be worth the extra time and paperwork to itemize.

As you prepare to file for the tax year, it may make sense to test-run both scenarios to see which could provide you with the most tax benefit.

Child tax credit changes

Another provision of the new tax code that could affect many filers this year is the child tax credit.

Tax reform increased the maximum credit amount from $1,000 to $2,000 per qualifying child and up to $1,400 of the credit may be refundable. That means if you qualify for the credit, and claiming it reduces the amount of tax you owe to $0, you could get the balance of the credit back (up to $1,400) as a refund.

Of course, there are limitations. The maximum refund you can receive from the credit is equal to 15% of your earned income above $2,500. This means if your total tax liability is $0, but your earned income exceeds $2,500, you may not be eligible for the full refund amount.

The tax law also drastically increased the phaseout amount for the credit. Previously, single filers with a modified adjusted gross income of $75,000 ($110,000 for those married filing jointly) either qualified for a reduced amount of the credit or not at all. Now, that phaseout begins at $200,000 MAGI for single filers and $400,000 for joint filers.

Tax reform also added a $500 nonrefundable credit for qualifying dependents who aren’t qualifying children. There are rules around who qualifies as a dependent for this credit, including an income limitation for the dependent, so be sure to check them out before trying to claim the credit.

Changes in deductions for homeowners

If you took out a new mortgage in 2018, you should be aware of some tax reform changes that affect homeowners. Here are a couple of the big ones.

• The Tax Cuts and Jobs Act temporarily capped the amount of acquisition debt for which you can take the mortgage interest deduction. As of the 2018 tax year, you might be able to deduct home mortgage interest on to the first $750,000 ($375,000 for those married filing separately) of mortgage or home equity debt used to buy, build or substantially improve a qualified residence. Loans taken out between Oct. 13, 1987 and Dec. 15, 2017, may be grandfathered under the pre-reform limit of $1 million ($500,000 for married filing separately).
• The deduction for state and local taxes (commonly known as the SALT deduction) has also changed. Before the new tax law, it was possible to deduct all state and local income taxes and many state and local property taxes, or state and local sales tax could be deducted in lieu of state and local income tax. The new tax code caps the total amount you can deduct for all SALT taxes at $10,000 ($5,000 for those married filing separately).

Tax breaks for students and grads

College is a big investment of time, energy and money. Fortunately, Uncle Sam offers some tax breaks that can help graduates, students and their parents defray higher-education costs.

Student loan interest deduction

If you’re paying interest on a student loan, you might be able to take the student loan interest deduction. The deduction is worth up to $2,500 or the total amount of interest you paid on the qualified student loan during the tax year, whichever is less.

There are income limits and other requirements for qualification, but you don’t have to itemize to take this deduction on your federal tax return. And there’s no limit on how many years you can claim this deduction, provided you qualify for it.

American opportunity tax credit

Undergraduate students or their parents (or anyone else who claims the student as a dependent) may be able to claim the American opportunity tax credit. The credit can be worth up to a maximum of $2,500 (100% of the first $2,000 of qualified education expenses and 25% of the next $2,000) for each eligible student.

The AOTC can also be partially refundable. If the initial portion of the credit reduces the tax the filer owes to $0, they can get 40% of the remaining amount (up to $1,000) back as a refund.

There are rules and qualifications for claiming the credit, including an income phaseout and income limit. Plus the credit is only available for the first four years of higher education.

Lifetime learning credit

For people in undergraduate, grad school or taking continuing-education classes, the lifetime learning credit can be worth up to $2,000 if they meet the qualifications for claiming it.

Qualifications include income limits, claiming the credit for qualified education expenses at an eligible educational institution, and some other requirements — so be sure you understand the criteria before you try to claim this credit. The good news is there’s no limit on how many years you can claim the credit as long as you qualify for it.

The lifetime learning credit isn’t refundable. And, you can’t claim both the AOTC and the lifetime learning credit for the same student in the same year.

File early to thwart fraudsters

Tax season is also scam season.

Identity thieves file fake tax returns using stolen identities in order to steal tax refunds. Having someone file a bogus return in your name could make it difficult to get any refund you may be due, or even cause the IRS to believe you owe when you actually don’t.

Nothing can guarantee that you won’t ever be a victim of tax identity theft, but filing your return as early as possible could help reduce your risk. Waiting to file could expose you to tax fraud. When it comes to the IRS, it’s first come, first served — so if the service receives a fake return before yours — and doesn’t catch the fraud while processing the return — any refund you may be due could go to the fraudster. But if you file first, you could thwart any identity thief who tries to file a return in your name, because the IRS will already have your real return.

Start planning for next year’s taxes

By the time tax season is over, you may not even want to think about next year’s tax return. But planning ahead for your next year’s federal income taxes could help you minimize your tax burden and maximize any refund you’re due.

Consider increasing your monthly contribution to your 401(k) and IRA accounts

For your 2019 taxes, you may be able to defer up to $19,000 of your income, pre-tax, into a 401(k) — up to $25,000 if you’re 50 or older. And the total contribution limit for 2019 for both traditional and Roth IRAs is $6,000 ($7,000 if you’re 50 or older)if you’re eligible to contribute.

Bottom line

Many Americans anticipate, and count on, their annual tax refund for a big infusion of cash. But consider your financial goals and needs when deciding if a big refund is best for you.

Having more tax withheld from your paycheck throughout the tax year may help contribute to a bigger refund come Tax Day. But it also could mean less money in your pocket throughout the year. Conversely, having just the right amount of tax withheld could mean no refund, but more money in your hands throughout the year — funds you can put toward your financial goals.

By adjusting your W-4 withholdings, you can influence the size of any refund you might be owed next year. Use the IRS withholding calculator to check whether you’re having the right amount of tax withheld from your paycheck.

Christina Taylor is senior manager of tax operations for Credit Karma. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She co-developed an online DIY tax-preparation product, serving as chief operating officer for seven years. She is the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.