The centerpiece of the Republicans' proposed "Tax Cuts and Jobs Act" is its claim to reduce taxes for middle-income Americans by lowering tax rates and increasing the standard deduction. However, for some taxpayers, particularly those who don't itemize deductions but do claim some special deductions on the front of their tax return, the promise of lower taxes may be elusive. 
The plan drops the number of tax brackets from seven to four. Individuals with taxable income up to $200,000 will have the first $45,000 taxed at 12 percent and the remainder at 25 percent. Married filers with taxable income up to $260,000 will have $90,000 of their income taxed at 12 percent and the rest at 25 percent. 
Currently, individuals and married filers with taxable income at these levels are taxed at four rates ranging from 15 percent to 33 percent.
In keeping with the theme of simplification -- and to pay for some of the plan's revenue-losing provisions, such as a lower corporate tax rate -- the proposal aims to remove a lot of deductions and tax credits. It also eliminates the personal exemption. In return, individuals and married fillers would get a significant increase in the standard deduction.
The current standard deduction is $6,350 for a single filer, and the personal exemption is $4,050, for a total deduction of $10,400. For married filers, the current standard deduction is $12,700, and when combined with the personal exemption ($4,050 x 2), their total deduction is $20,800.
Under the GOP plan, the standard deduction nearly doubles to $12,200 for single filers and $24,400 for a married couple filing jointly. About 75 percent of filers now claim the standard deduction and don't itemize, so many could see some benefit from these changes.   
However, the plan also aims to eliminate several deductions that many middle-income taxpayers can now claim. These are are commonly known as "above-the-line" deductions because you can claim even if you don't qualify to claim itemized deductions. The most commonly claimed itemized deductions are for state and local taxes, mortgage interest and charitable donations, the first two of which could also go away or be severely limited. 
The four above-the-line deductions eliminated under the tax plan are:
Moving expenses: If you meet specific IRS criteria and have moving expenses relating to a change in job or business location, those expenses are currently deductible. In 2015 (the last year with available data), approximately 1.1 million taxpayers claimed this deduction, which saved them about $3.7 billion. But the GOP tax plan eliminates it.
Alimony: Nearly 600,000 taxpayers claimed a deduction for alimony paid to an ex-spouse, saving them nearly $12.3 billion. The Republican tax plan also ends this deduction.
Student loan interest: Single filers with income of up to $65,000, or joint filers with income of $130,000 or less, can now deduct interest of up to $2,500 annually on student loans. Considering that the aggregate student loan debt in the US is over $1 trillion and about 13.4 million Americans claimed this deduction, its loss would affect lots of people.
Tuition and fees: This special deduction currently allows taxpayers to deduct up to $4,000 of qualified education expenses. The income levels that allow full or partial deductibility of these expenses is the same as for the student loan interest deduction above. Eliminating this deduction could especially hit those getting training for new jobs. 
The takeaway is that while most of middle-income Americans would see a tax cut from a few hundred to a few thousand dollars (depending on the amount of income), many others wouldn't see as much, and others would see some increase in taxes. But remember, under the current GOP plan, the lower tax rates would be in effect for just 10 years, so come 2027 all bets would be off. 

During the holiday shopping season, shoppers are looking for the perfect gifts. At the same time, criminals are looking for sensitive data. This data includes credit card numbers, financial accounts and Social Security numbers. Cybercriminals can use this information to file a fraudulent tax return.
This tip is part of National Tax Security Awareness Week. The IRS is partnering with state tax agencies, the tax industry and groups across the country to remind people about the importance of data protection.
Anyone with an online presence can do a few simple things to protect their identity and personal information. Following these eight steps can also help taxpayers protect their tax return and refund in 2018:

• Shop at familiar online retailers. Generally, sites with an “s” in “https” at the start of the URL are secure. Users can also look for the “lock” icon in your browser’s URL bar. That said, some criminals may get a security certificate, so the “s” may not always mean a site is legitimate.  
• Avoid unprotected Wi-Fi. Users should not do online financial transactions when using unprotected public Wi-Fi. Unprotected public Wi-Fi hotspots may allow thieves to view transactions.
• Learn to recognize and avoid phishing emails that pose as a trusted source. These emails can come from a source that looks like a legitimate bank or even the IRS. These emails may include a link that takes the user to a fake website. From there, the thieves can steal usernames and passwords.
• Keep a clean machine. This includes computers, phones and tablets. Users should install security software to protect against malware that may steal data. This software also protects against viruses that may damage files.
• Use passwords that are strong, long and unique.Experts suggest a minimum of 10 characters. Use a combination of letters, numbers and special characters. Use a different password for each account.
• Use multi-factor authentication when available. Some financial institutions, email providers and social media sites allow users to set their accounts for multi-factor authentication. This means users may need a security code, usually sent as a text to their mobile phone, in addition to a username and password.
• Sign up for account alerts. Some financial institutions will send email or text alerts to an account holder when there is a withdrawal or change to their accounts. Generally, people can check their account profile to see what added protections may be available.
• Encrypt sensitive data and protect it with a password. People who keep financial records, tax returns or any personal information on their computer should protect this data. Users should also back up important data to an external source. When disposing of a computer, mobile phone or tablet, people should make sure they wipe the hard drive of all information before trashing.

Domestic abuse often includes control over finances. An important part of managing finances is understanding one’s tax rights. Taxpayers have the right to expect the IRS to consider facts and circumstances that might affect the individual’s taxes.
Taxpayers have the right to:

• File a separate return even if they’re married.
• Review the entire tax return before signing a joint return.
• Review supporting documents for a joint return.
• Refuse to sign a joint return.
• Request more time to file their tax return.
• Get copies of prior year tax returns from the IRS.
• Seek independent legal advice.

Taxpayers also have the right to request relief from the liability shown on a joint return. This is known as innocent spouse relief. Here are a couple of examples:
Example 1:

• A taxpayer signs a joint return with their spouse.
• The taxpayer thought their spouse paid all taxes due.
• The IRS contacts the taxpayer because the taxes shown on the joint return were not paid.

Example 2:

• The taxpayer signs a joint return with their spouse.
• The taxpayer didn’t know about their spouse’s unreported income or erroneous deductions.
• The IRS adjusted the taxes due because of their spouse’s improper items.

To apply for Innocent Spouse Relief, a taxpayer fills out Form 8857, Request for Innocent Spouse Relief.   More Information:

• Publication 504, Divorced or Separated Individuals
• Taxpayer Bill of Rights
• IRS Publication 971, Innocent Spouse Relief

The IRS mails millions of letters to taxpayers every year for many reasons. Here are seven simple suggestions on how individuals can handle a letter or notice from the IRS:

1. Don’t panic. Simply responding will take care of most IRS letters and notices.
   
   
2. Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.
   
   
3. Compare it with the tax return. If a letter indicates a changed or corrected tax return, the taxpayer should review the information and compare it with their original return. 
   
   
4. Only reply if necessary. There is usually no need to reply to a letter unless specifically instructed to do so, or to make a payment.
   
   
5. Respond timely. Taxpayers should respond to a letter with which they do not agree. They should mail a letter explaining why they disagree. They should mail their response to the address listed at the bottom of the letter. The taxpayer should include information and documents for the IRS to consider. The taxpayer should allow at least 30 days for a response.When a specific date is listed in the letter, there are two main reasons taxpayers should respond by that date:
   
   • To minimize additional interest and penalty charges.
   • To preserve appeal rights if the taxpayers doesn’t agree.
     
     
6. Don’t call. For most letters, there is no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can use the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.  
   
   
7. Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.  

Additional IRS Resources:

With the holidays around the corner, many people will be making donations to benefit charitable organizations. However, come tax time, the person who made the donation might also benefit. That’s because taxpayers who donate to a charity may be able to claim a deduction for the donation on their federal tax return.

Here are five facts about charitable donations:

Qualified Charities. A taxpayer must donate to a qualified charity to deduct their contributions. Gifts to individuals, political organizations, or candidates are not deductible. To check the status of a charity, taxpayers can use Exempt Organizations Select Check on IRS.gov.

Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and 
itemize their deductions. To do this, taxpayers complete Schedule A, Itemized Deductions. They file this form with their tax return.

Getting Something in Return. Taxpayers may receive something in return for their donation. This includes things such as merchandise, meals, and event tickets. Taxpayers can only deduct the amount of the donation that’s more than the fair market value of the item they received. To figure their deduction, a taxpayer would subtract the value of the item received from the amount of their donation. 

Type of Donation. For donations of property instead of cash, a taxpayer can only deduct the fair market value of the donated item. Fair market value is generally the price they would get if they sold the item on the open market. If they donate used clothing and household items, those items generally must be in good condition. Special rules apply to certain types of property donations, such as cars and boats.

Donations of $250 or More. If a taxpayer donates $250 or more in cash or goods, they must have a written receipt from the charity. The statement must show:

• The amount of the donation.
• A description of any property given.
• Whether the taxpayer received any goods or services in exchange for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.