Ocean City Today

AARP Foundation to offer free tax preparation services

By Greg Ellison | Jan 25, 2018

(Jan. 26, 2018) Despite widespread media coverage of recently passed revisions to the federal tax code, as the current filing season gets underway experts with the AARP Foundation are quick to note the bulk of changes would not impact returns this year.

Maria Liebig, AARP tax aide district coordinator, said the group would begin offering free tax preparation for low to moderate income earners at several locations around Worcester County beginning next Friday.

“For the most part the modifications resulting from the tax reform bill would go into effect for the 2018 tax year,” she said. “This means the impact will not be felt until filing in 2019.”

For example, Liebig said the tax reform retains the same seven tax brackets, but lowered rates on most and, again, refers to income earned in 2018.

“The vast majority of the changes made to individual taxes are temporary and will expire after the 2025 tax year,” she said.

Although most filers will, at least for the next seven years, see their standard deduction nearly double, Liebig said a corresponding elimination of the personal exemption effectively undercuts the fiscal gains.

“While it has been characterized as a tax cut, in practice the increased standard deduction in essence simplifies tax code,” she said.

To partially compensate for the personal exemption elimination, Liebig said the tax reform package also expands the Child Tax Credit for dependents under the age of 17.

“The bill doubles the Child Tax Credit to $2,000, while also boosting the refundable portion to $1,400,” she said.

The tax revision also drops the mortgage interest deduction for real estate transactions completed after last Dec. 15 to a maximum purchase price of $750,000, which was previously capped at $1 million, Liebig said.

She also noted although the tax modifications eliminate the home equity debt interest deduction, it would allow for up to $100,000 in home equity debt to be considered.

Another highly contentious subject during the tax bill debate was a proposal to drop state and local tax deductions, with Liebig noting although not fully eliminated, the dollar figure was capped at $10,000, which includes income, sales and property taxes.

The reforms will, eventually, drop the Affordable Care Act penalty for those lacking health insurance coverage, but Liebig said the change would not be effective until tax year 2019.

Liebig said the ceiling for medical expense deductions, which will drop from 10 percent of adjusted gross income to 7.5 percent, would be retroactive to 2017.

Regardless of the impact, or lack thereof, for 2017 returns, Liebig said as the recently approved tax brackets are implemented many would see their paychecks alter slightly during 2018.

The AARP will provide no cost tax preparation assistance from Feb. 2 through April 16 at the following locations: Ocean Pines Library on Monday; Ocean City Senior Center on 41st Street on Saturday; Pocomoke City Library on Friday and Salisbury/Mac Center on Tuesday. Volunteers will assist in e-filing returns but cannot prepare rental/business income.

To schedule appointments for the Ocean Pines or Ocean City locations call 410-641-5036; for Pocomoke call 410-957-0878; for Salisbury contact 410-376-3662. Tax assistance will be available from 9 a.m. to 3 p.m. by appointment only.

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