2019 Standard Deductions:
As predicted, the standard deductions increased slightly from 2018 to adjust with inflation rates. For tax year 2019 the Standard Deductions are as followed:
- Singles/MFS- 12,200
- Head oh Household- 18,350
- Married Filing Jointly- 24,400
- Singles and HOH over 65 receive an additional 1,650
- MFJ over 65 receive an additional 1,300
- Kiddie Tax starts at 1,100
2019 Personal Exemptions:
Personal exemptions are not returning for 2019 as they remain at $0.
2019 Itemized Deductions:
As for the itemized deductions, you still lose the unreimbursed employee business expense, casualty losses (unless its a federal declared loss, which is deductible after $500), state and local tax above $10,000, hobby income expenses, employee office in the home expense, union dues and the phase-out limitations.
Good news for all the gamblers, losses are still permitted. Tax prep fees are gone unless they are tied to a business forms such as C, E, F.
2019 Income Tax Rates:
|Tax Rate||Single/MFS||MFJ||Head of Household|
|10%||$0 – $9,700||$0 – $19,400||$0 – $13,850|
|12%||$9,700 – $39,475||$19,400 – $78,950||$13,850 – $52,850|
|22%||$39,475 – $84,200||$78,950 – $168,400||$52,850 – $84,200|
|24%||$84,200 – $160,725||$168,400 – 321,450||$84,200 – $160,700|
|32%||$160,725 – 204,100||$321,450 – 408,200||$160,700 – 204,100|
|35%||$204,100 – 510,300||$408,200 – 612,350||$204,100 – $510,300|
|37%||Over $510,300||Over $612,350||Over $510,300|
Deductions that went bye-bye:
- Personal Exemptions
- Casualty & Theft Losses (except federally declared disasters)
- Mass-transit, parking, & bicycle reimbursements are no longer tax-free
- Miscellaneous & Unreimbursed Employee Business Expenses
- Kiddie Tax going from parent’s rate to Form 1041 rate
- Moving Expenses (unless you are active military)
- Home Equity Loan Interest is no longer deductible (unless for home improvement)
- College donations to purchase athletic tickets
- Business Entertainment and country club dues- Business meals are fine
- Separate rules for Leasehold Improvements, Restaurant property, & Retail Improvements are repealed.
- Alimony beginning on or after January 1, 2019 is no longer Income to the recipient or a Deduction to the payor
- The Affordable Healthcare Act Individual Mandate and the penalty is repealed in 2019
- Tuition & Fees Deduction
- $2 million exclusion on cancellation of debt for mortgage on residence
- Mortgage Insurance Premium Deduction on Itemized Deductions
Child Tax Credit:
The child tax credit for children under the age of 17 is still 2K per child. Older children and other dependents qualify for the $500 dependent credit, which is useful in situations where you may owe taxes less than $500.
New Standard Mileage Rates:
The business mileage rate has increased to $.58 up from $.545/mile. The Medical & Moving mileage has increased by 2 cents a mile up to $.20/mile. Since Charity mileage was set by statute for 1998 forward, it remains at $.14/mile. Parking & tolls are a separate deduction. If the vehicle is sold or traded remember to reduce basis by the depreciation component of $.26/mile.
Education Credits & Deductions:
The credits and deductions have not change however, the income threshold are higher for 2019. The American Opportunity Credit is still $2,500 with 40% of the credit being refundable. The AGI phase-out runs from $160k to $180k (MFJ) and $80k to $90k (Single).
The Lifetime Learning Credit is $2,000 or 20% of tuition & fees if lower. The AGI phase-out runs from $116k to $136k (MFJ) and $58k to $68k (Single).
Student loan interest deduction is $2,500. AGI phase-out runs from $140k to $170k (MFJ) and $70k to $85k (Single).
Stay tune for the next blog as we discuss more 2019 tax updates.
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