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Liberty Tax Poll: Taxpayers Likely to Seek Increase in Tax Deductions in 2017 To Deal With Effects of Tax Law

VIRGINIA BEACH, Va., Dec. 27, 2017 (GLOBE NEWSWIRE) -- Liberty Tax, Inc. (NASDAQ:TAX)

Tax reform is top of mind for taxpayers, and many are looking for ways to use their 2017 tax return to mitigate its effects. In a Liberty Tax poll of more than 1,000 individuals, nearly 70 percent said they were at least slightly likely to seek an increase in tax deductions or credits in 2017 because of tax reform. High on their lists was giving to charity, with nearly 50 percent suggesting they are likely to increase their 2017 charitable contributions, which can be tax deductible.

“At Liberty Tax, we recognize tax reform as an issue of concern to taxpayers,” said Liberty Tax CEO Ed Brunot. “We are prepared for the questions taxpayers will bring to us this season as they sit down with their Liberty Tax preparer. We will address those concerns and help taxpayers – as always – with our guarantee of accuracy and our exceptional customer service that millions have come to know and trust.”

Liberty Tax commissioned its poll in December – before President Trump signed the tax bill into law – to gauge awareness of tax reform. Liberty Tax also wanted to learn about actions taxpayers may be taking during the close of 2017 as they weigh tax bill changes that might affect their liability or tax refund. Respondents ranged in age and income, with the majority between ages 18 and 60 and with incomes of $125,000 or less.

The Tax Cuts and Jobs Act – as the bill initially was dubbed – nearly doubles the standard deduction for individuals, eliminates some itemized tax deductions, and reduces the State and Local Tax Deduction (SALT), among other things.  

Not surprisingly, more than 68 percent of those polled said they are at least slightly likely to seek an increase in tax deductions or credits during the 2017 tax year to counter changes in the tax bill. More than 10 percent said they were extremely likely to seek deductions, and more than 15 percent said they were very likely to seek deductions. When evaluating four deductions or credits that had gotten significant publicity in the tax reform discussion:

  • Nearly 50 percent said they likely would increase charitable contributions this tax year. Under the tax law, qualified charitable contributions will remain available to taxpayers who itemize. However, the law nearly doubles the standard deduction, which may mean that fewer taxpayers will itemize.
  • About 35 percent said they would likely increase medical expenses and the state and local income and sales taxes. The tax law does not eliminate medical expense deduction as some had feared it might. In fact, the law retroactively decreases the threshold for medical expense deductions to 7.5 percent from 10 percent of adjusted gross income. As for the SALT deduction, the tax law limits the deduction to $10,000 and includes measures to prevent taxpayers from deducting state and local income taxes they may prepay in 2017.
  • More than 27 percent said they likely would increase college tax credits.  Earlier versions of the House tax bill called for eliminating some college tax credits and deductions. The tax law keeps the college tax credits currently available to taxpayers.

Taxpayers have only days left to make moves that can reduce their 2017 taxes. Those looking to offset the changes in the new tax law will find a few options – such as prepaying property taxes, – which may make sense for them in 2017 taxes.

Liberty Tax reminds taxpayers that the bulk of the changes in the new tax law will not take effect until 2018 and beyond. Surprisingly, the Liberty Tax poll found that nearly 78 percent of respondents were at least slightly concerned that tax reform would affect their 2017 taxes. Nearly 50 percent thought tax reform would increase their taxes or decrease their 2017 tax refund.

When taxpayers visit a Liberty Tax office this tax season, they will be greeted by professional tax preparers who will be ready to address taxpayer questions about the tax law and who guarantee the most accurate tax return and the largest possible refund to which the taxpayer is entitled. Liberty Tax offices across the country will open for the 2018 tax season on January 2, 2018.

About Liberty Tax, Inc.
Founded in 1997, Liberty Tax, Inc. (NASDAQ:TAX) is the parent company of Liberty Tax Service. In the U.S. and Canada, last year Liberty Tax prepared over two million individual income tax returns in more than 4,000 offices and online. Liberty Tax's online services are available through eSmart Tax, Liberty Online and DIY Tax, and are all backed by the tax professionals at Liberty Tax locations and its nationwide network of seasonal tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor to many charitable causes. For a more in-depth look, visit Liberty Tax Service and interact with Liberty Tax on Twitter and Facebook

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Source: Liberty Tax, Inc.