In 2017, Donald Trump passed a new tax law called the Tax Cuts and Jobs Act, and it went into effect on January 1, 2018. The new tax law had a few changes that will affect college students as they file taxes this 2019 tax season. The law didn’t renew the tuition and fees deduction that is usually offered, changed the tax brackets and raised the federal standard deduction.
The tuition and fees deduction was a deduction offered to college students that would add some money to their refund. It was under review when the former tax law expired, and Congress and Trump have not renewed it. Deductions like this one reduce the amount of taxes you have to pay to the government, which often times will end up with you getting a refund from the federal government. The tuition and fees deduction was a maximum of a $4,000 deduction for students who paid towards their tuition or fees for their higher education. Last year, the tuition and fees deduction was not renewed at the time people were filing their taxes, but it came back into effect later in the year. If the tuition and fees deduction gets renewed again after taxes are already filed, you will have to go in and amend your tax form. As of right now, however, this deduction is not offered for 2018 taxes. It is possible it will be allowed later.
The tax brackets were changed for this tax season. Tax brackets specify what percentage of your income will be taxed depending on how much income you brought in for the year. The idea behind it is that people who make more get taxed at a higher rate. The bottom line of the new tax brackets for individual filers is that less taxes will be taken out of each bracket this year up to an income amount of $191,650, which is not likely to apply to any Blackburn student. The old tax brackets and new tax brackets are located in the chart.
The federal standard deduction was raised from $6,350 in 2017 to $12,200 for 2018. Previously, people could itemize things on their taxes like charitable donations, work expenses and school expenses, but in order to do so you would have to prove that you paid those expenses. With a higher standard deduction, that’s a higher limit to what you can donate or spend before you have to prove it and deduct it. This means that the federal government assumes what you donate or spend, without you actually having to do it. This could mean fewer people donating to a non-profit organization like Blackburn, for example. Vice President of Administration and Finance Steve Morris said this has yet to happen. “The reason for that is that our donors are committed to our cause,” Morris said, “They don’t give for a tax deduction; they give for the love of our institution and their belief in our mission.”
Overall, the tax brackets changed and the standard deduction was raised, which are both things that can have positive effects on tax refunds for some. The new law also took away personal deductions like the tuition and fees deduction, which sometimes comes out to more than the standard deduction. Depending on individual circumstances, these new tax laws could have a negative or positive effect on filing taxes this year. Either way, as the years go by, it’s possible the new law decreases the incentive to contribute charitable donations to any non-profit like Blackburn. While it hasn’t had an impact on our donors this year, it could in the future. Happy taxing!