Updated February 2021
Yes, it’s everybody’s favorite time of year. The weather is starting to warm up with an occasional wisp of a warm breeze from the south. The sunshine seems to do more than making the cold more obvious… Spring is on its way!
You know what else is on its way? The tax-filing deadline (woomp woooomp). If you’re somebody who dreads doing taxes, well, you probably already know you’re not alone. But we’re here to help you through this dreary time, and maybe you’ll even make money!
Considering the $1.5 trillion Tax Cut and Jobs Act signed in December of 2017, it may affect you as a first responder and a private citizen.
Here are some helpful guidelines:
Property Tax Deduction Capped
Congress has capped the state and local tax (SALT) deduction at $10,000 from what has been unlimited.
Public safety budgets across the US are largely drawn from state and local property sales and income taxes. The SALT deduction helps support these vital investments at the state and local level.
This would disproportionately affect states with high taxes and living costs, like California and New York where the average SALT deduction was $18,400.
Your deduction of state and local income, sales, and property taxes is limited to a combined total deduction of $10,000 ($5,000 if married filing separately). You may be subject to a limit on some of your other itemized deductions also.
Standard Deductions Increased; Some Itemized Deductions Eliminated
Your standard deduction nearly doubles to $12,400 for a single filer, $18,650 for head of household, and $24,800 for married couples filing jointly, if you don’t file an itemized federal tax return.
Unreimbursed job expenses such as uniforms, travel, union dues, required weapons, and itemized deductions are no longer available.
Law enforcement officers who previously took advantage of these or other itemized deductions may want to reassess whether itemizing is still beneficial when compared to the new, higher standard deduction.
Income Tax Levels Rates and Changes
The number of income tax brackets remains the same (7); however, income levels and rates will change in each one and these changes will expire December 31, 2025.
|Rate||For Single Individuals||For Married Individuals Filing Joint Returns||For Heads of Households|
|10%||Up to $9,875||Up to $19,750||Up to $14,100|
|12%||$9,876 to $40,125||$19,751 to $80,250||$14,101 to $53,700|
|22%||$40,126 to $85,525||$80,251 to $171,050||$53,701 to $85,500|
|24%||$85,526 to $163,300||$171,051 to $326,600||$85,501 to $163,300|
|32%||$163,301 to $207,350||$326,601 to $414,700||$163,301 to $207,350|
|35%||$207,351 to $518,400||$414,701 to $622,050||$207,351 to $518,400|
|37%||$518,401 or more||$622,051 or more||$518,401 or more|
Mortgage Interest Deductions Limited
Mortgage interest can be deducted only if the loan doesn’t exceed $750,000, $375,000 if married filing separately. New mortgage loans, after December 16, 2017, are only affected and you are not affected if you are a homeowner with an existing mortgage.
Home Equity Loan Deductions Eliminated
If you have a home equity loan, you can no longer deduct the interest from a loan secured by your home to the extent the loan proceeds weren’t used to buy, build, or substantially improve your home. Previously, up to $100,000 was deductible.
Child Tax Credit Grows
The Child Tax Credit is a refundable tax credit of up to $2,000 per eligible child and $500 per eligible dependent. The credit phases out as adjusted gross income amount to $200,000 for single filers and $400,000 for married couples filing jointly.
Medical Expense Deduction Expanded
For tax returns filed in 2021, taxpayers can deduct qualified, unreimbursed medical expenses that are more than 7.5% of their 2020 adjusted gross income. So if your adjusted gross income is $40,000, anything beyond the first $3,000 of medical bills — or 7.5% of your AGI — could be deductible.
The 7.5% threshold used to be 10%, but legislative changes at the end of 2019 lowered it.
Filing on your own this year? We love your go-getter attitude! Just keep in mind that you have plenty of sites available to help make the process easier. We’ve gathered some tax preparation websites for you and developed brief descriptions as to how they’ll help in certain situations. Please note that RMLEFCU does not endorse the content on any of these websites. Please consult a tax professional for advice. Now go do those taxes!
Best Law Enforcement Specific Tax Preparation Sites
Police Tax is the best resource for all-inclusive help. Tax planning, tax preparation services, audit help, IRS payment plans: you name it, this website will help you with it. This site is created by a former law enforcement officer and designed to help you get the most out of your taxes and to answer any question you might have about them along the way. Check out their site full of deduction lists if you plan on doing your taxes yourself: they’re printable sheets to make sure you don’t miss a single penny!
Deductions List is a simple, easily digested list with tax write-offs available to law enforcement officers. A good place to start while you are preparing to begin your taxes: this website will make sure that you’re gathering all the information you need.
Have pressing questions about deductions? General Law Enforcement Topics will allow you to ask specific questions and crowdsource the answer. See how other law enforcement officers do their taxes and get some great tips about how to get the most out of your deductions. Just keep in mind that you are not always talking to tax professionals!
Best Sites for Online Tax Filing
The number one rated free online tax filer is Turbo Tax. The software is simple enough so that maybe even your five-year-old child could do your taxes for you (although we don’t suggest that). Not only is it straightforward, but their approach is also friendly and even a little bit entertaining at times. That’s right, TurboTax almost makes doing taxes fun. Almost.
H&R Block ranks a close second in the ever-exciting tax preparation software race. Although TurboTax wins in the simplistic, entertaining taxes category, there are a few hidden fees built into the process that makes their software not quite free. H&R Block has these fees as well, but they’re about half the price of TurboTax’s, and you still get the step-by-step help for preparing the forms. Try them out if you’re willing to sacrifice the wit and humor of TurboTax for a ~$20 savings.
As always, feel free to contact us as RMLEFCU with any questions you may have, tax-related or not. Happy tax season!
*For accurate tax advice it is important that you consult a tax professional. This article is meant only to provide helpful information for police officers. You should not use this article as a basis for tax decisions.