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- Separate rules for Leasehold Improvements, Restaurant property, & Retail Improvements are repealed.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- The Affordable Healthcare Act Individual Mandate and the penalty is repealed in 2019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.
In the meantime, follow us on social media and visit our website to download more resources.
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go to www.cswestcpas.com to learn more.