What you need to know before filing your taxes

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Confused about how the new tax rules will affect you? You’re not alone.

With the ink barely dry on a new tax law, uncertainty abounds on what moves to make or even what to ask a tax preparer. So what do you need to know before you collect that box of receipts and make the trip to see your accountant?

Here’s a rundown of the important things to note this tax season, including what the new tax law will (and will not) mean for you:

Change has not come yet

Many people assume that with the December passage of the tax reform bill, the changes are taking effect with the forms they’re filing out over the next few months, said David Marzahl, president of the Center for Economic Progress, a Chicago nonprofit which provides free tax services for low-income individuals and families. But the law mostly affects taxes starting in 2018, not what’s owed for 2017.

“People need to move very cautiously as they prepare their 2017 tax returns and not be swayed by all the messaging,” Marzahl said.

Marzahl recommends that filers think about their 2017 returns and the tax reform changes in two separate steps: First, file your taxes with deductions you took last year, as long as nothing major has changed, like a marriage or a new baby. Once that’s done, he said, ask your tax preparer about what you can adjust to be fully prepared for the changes to come.

For most individuals, the most important thing will be to ensure your withholding is correct.

“For your general W-2 wage earner, your world hasn’t changed a whole lot,” said Mitchell Goldberg, a partner and tax attorney at the Florida-based law firm Berger Singerman.

For small-business owners, preparation for the changes will be more complicated, and will depend on some information that has yet to be clearly defined. For example, the Treasury Department has said that some service companies, like law offices and accounting firms, won’t be able to take advantage of sizable taxrate reductions for so-called passthrough businesses like limited liability companies, where individual owners pay taxes for the business on their personal tax returns. But the definition of a service business hasn’t been clearly spelled out — something that’s expected to come later this year.

Expect a bigger paycheck

Here’s a bright spot coming soon: Most Americans — about 90 percent — will see a little bump in their paychecks starting next month, according to the U.S. Treasury.

The salary increases will be the result of adjustments in the IRS withholding table, which is what employers use to determine how much to take out of employees’ paychecks. Many employers will adjust their employees’ withholding automatically under the new law, experts say. But Manuel Pravia, a principal at the Florida accounting firm MBAF, recommends that taxpayers ensure their withholding is correct so they don’t get a shock come tax time next year. If you are put into a withholding category that leaves you with extra money in your paycheck, it could mean that you’ll wind up owing the IRS. The withholding table for 2018 is not yet available, but will be posted on irs.gov.

Refunds will be slower

Expect a refund this year? You’ll need an extra dose of patience. All the changes in tax law — combined with a short-staffed Internal Revenue Service — have the government running a bit slower this year, Marzahl said. That may delay many federal refunds filed via standard mail this year.

The delay won’t rise past a minor annoyance for most Americans, but it could be a significant burden for low-wage earners who count on federal refunds to cover rent and other critical bills, Marzahl said.