The first year of returns under the Tax Cuts and Jobs Act (TCJA) is complete. We thank all our clients for their patience while we found the best options for each of you under this new law.
As a Greek philosopher once wrote “change is the only constant”. Taking that to heart, the federal government is already changing some of the forms and schedules for the 2019 returns from how they appeared in 2018. 1040’s are being updated as well as it’s sub-schedules, so much for that “post card” return.
In an effort to make senior’s tax returns easier to self-prepare, the new form 1040-SR will be debuted in the 2020 filing season. It will be similar to the old 1040-EZ. The form is still a draft, but indications are that there will be no income limitations for using it, but taking the standard deduction may be required. With seniors in mind, fonts will be larger and more color contrast will be used to differentiate various sections. If you intend on self-preparing using this form for your 2019 filing, please let us know. If we don’t hear from you during tax season we worry.
An updated Form W-4 is anticipated to be released for use in determining tax year 2020 payroll withholdings. It’s not required to complete the new form on release, but if your withholdings haven’t been covering your tax in 2018/2019, or you’re over withholding, we recommend you complete the new form with your employer.
Some Additional updates:
- The penalty under the individual mandate for health insurance is being waived by the IRS starting with the 2019 tax year. Please keep in mind, however, there are states that will continue to charge a fee for being uninsured. It’s important to know your state level requirements.
- If your itemized deductions included medical costs in the past, please be aware that the threshold for deducting these costs has risen from 7.5% in 2018 to 10% in 2019.
- Under the TCJA, the standard deduction and all tax brackets are indexed to inflation. For 2019 the Standard Deductions are;
|FILING STATUS||STANDARD DEDUCTION AMOUNT|
|Single & Married Filing Separate (MFS)||$12,200|
|Head of Household||$18,350|
|Married Filing Joint (MFJ)||$24,400|
- For any divorce finalized after December 31,2018, alimony is no longer deductible by the payor and not included in income of the payee. In most cases, alimony paid/ received under a divorce finalized on or before that date will continue to receive the same tax treatment as before. If amending agreements started before 12/31/2018, ways may exist to incorporate the previous tax law, know your options.
- The 2019 retirement account contribution limits include:
- 401(k) base contribution: $19,000 (up from $18,500 last year)
- 401(k) catch-up contribution (for taxpayers age 50 and older): additional $6,000 (unchanged)
- IRA base contribution: $6,000 (up from $5,500)
- IRA catch-up contribution (for taxpayers age 50 and older): additional $1,000 (unchanged)
- The 2019 contribution limits for people who are eligible for an HSA and have the following types of high-deductible health insurance policies are:
- Self-only coverage: $3,500 (up from $3,450 last year)
- Family coverage: $7,000 (up from $6,900)
We are happy to meet with you throughout the year for tax planning, retirement and similar income tax related issues, and sincerely appreciate your continued business each year.
We will be holding our annual client brunch on January 18, 2020 where we will be reviewing these and many other tax issues. Please check out the tab on our website for details and reservations.
We started out talking about change, and in that vein, our office isn’t immune from it any more than elsewhere. Some faces have changed over the years and this year is no different. We welcome aboard this coming tax season Mark Cascino E.A. and the clients of his Tax Consulting Services.
One thing that will not change at Dunn & Pedro is our…
Experience, Integrity & Honesty- and that sums it up.
We appreciate your continued trust in our services and look forward to seeing you soon.
The Staff at,
Dunn & Pedro CPA’s