Federal Tax Changes in 2019 To Stay Updated On
Every year, tax laws change. While some of these changes are minor, others are pretty significant. Keeping up with any changes that happen, both at the local, state, and federal level, is extremely important. Otherwise, you could be in for a surprise when tax season rolls around!
Here’s what you’ll need to know about taxes for the coming year.
Alimony
If you’re divorced or are going through a divorce in 2019, you’ll want to pay attention to these changes in alimony taxes. Alimony is a series of payments made by either a husband or wife as part of a divorce settlement.
For divorce settlements that get settled in 2019 and any consecutive years thereafter, the paying spouse may no longer claim alimony as tax deductible. In addition, any separate payments for maintenance are also not deductible.
Another tax change regarding alimony that you’ll want to be aware of for 2019 is that these payments are not included in the receiving spouse’s income.
Affordable Care Act Penalty
In previous years, individuals without health insurance were penalized under the Affordable Care Act. You would face a tax penalty if you or any of your dependents were not insured. However, the penalty was removed as of 2019. If you do not have health insurance, you will no longer be penalized under the act.
2019 Provisions
Due to inflation adjustments, provisions are being changed in 2019 for a number of deductions and tax breaks. It’s important to be aware of these as you head into the new year.
Schedule A Medical Expenses
In previous years, any medical expenses that exceeded 7.5% of your AGI could be deducted for tax purposes. As of 2019, however, only the unreimbursed amount is deducted. On top of that, the expense must now exceed 10% of your adjusted gross income.
Standard Deductions
The standard deductions for taxpayers in 2019 have changed slightly, which is great news for taxpayers! For single individuals, the new standard deduction is $12,200. Previously the deduction was $12,000 for individuals.
For couples who are married filing jointly, the new standard deduction is $24,400. This is an increase of $400 from 2018 when the standard deduction was only $24,000.
Finally, for anyone who is filing as the head of household, there is also a new standard deduction. In 2019 this amount will be $18,350. In previous years, the standard deduction was only $18,000. So, this provides taxpayers with a $350 increase in their deduction.
Mileage Rates
Many companies and nonprofits claim taxes on mileage used as part of their operations. For businesses, this was 54.5 cents in 2018 and 53.5 cents in 2017. In 2019, the mileage rate takes a large leap up to 58 cents per mile.
For medical and moving companies, the mileage rate is now 20 cents per mile. In 2018 it was 18 cents per mile and in 2017 it was just 17 cents per mile. Finally, charities are now able to claim 14 cents per mile.
Retirement Limits
Retirement accounts have limits on how much of their contributions can be deducted for tax purposes. These limits have changed slightly as of 2019.
For IRA accounts, the new contribution limit is $6,000. For taxpayers who are older than 50, the limit is $7,000. This is a rather significant increase from 2018, during which the limit was $5,500 and $6,500 for taxpayers over the age of 50.
Other retirement accounts, including 401(k) plans, 403(b) plans, and 457 plans have also seen changes in their contribution limits. These plans now have a contribution limit of $19,000. If you’re over the age of 50 the limit is $25,000. Again, this is quite a significant increase from 2018, during which the limit was $18,500 or $24,500 for anyone over the age of 50.
Not sure how to handle these changes? We’re here to help. Silver Tax Group is available for your free consultation, so give us a call now.
