Tuesday Tax Tip: 2019 Tax Filing Changes to Know

There is still time to get more out of your  deductions and contributions before the end of the  2019 tax year.  Parts of the 2017 reform did not take effect until this year, and, as most years, the contribution caps changed for 2019.  Here is what you should know about 2019 tax filing changes.

  1. The individual mandate penalty is gone.  The tax cuts and jobs act zeroed out the penalty for folks who did not get their own health insurance as of 2019. 
  • The health care deductible was reduced.  This means taxpayers can deduct from their taxes any eligible medical and dental expenses over 7.5 percent of their adjusted gross income instead of the 10 percent as the 2010 Affordable Care Act mandated. That is an extra 2.5% relief of out of pocket medical expenses for those taxpayers who itemize expenses.
  • Alimony deduction is eliminated as of 2019.  For divorce and separation agreements made or modified this year or in future years, alimony payments will not be deductible.
  • As a reminder: 401(k), IRA and other Retirement Plan limits were raised this year and you can still request the higher amount be contributed. 
    • 401(k) base contribution 2019 limit is $19,000 (up from $18,500 as of 2018)
    • 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 Health Savings contribution limits were raised.  If you are eligible, the 2019 contribution limits are
    • Self-only coverage: $3,500 (up from $3,450 last year)
    • Family coverage: $7,000 (up from $6,900)
  • Higher Standard Deductions
  1. Married filing jointly: $24,400 (up $400 from last year)
  2. Married filing separately: $12,200 (up $200)
    1. Head of Household: $18,350 (up $350)
    1. Single: $12,200 (up $200)
  • Higher Income Brackets.  IRS tax rates for single filing status
  1. 37% tax rate: Applies to incomes of more than $510,300
  2. 35%: More than $204,100 but not more than $510,300
  3. 32%: More than $160,725 but not more than $204,100
  4. 24%: More than $84,200 but not more than $160,725
  5. 22%: More than $39,475 but not more than $84,200
  6. 12%: More than $9,700 but not more than $39,475
  7. 10%: $9,700 or less
  8. For other filing status click IRS site.

If you are looking for a tax preparer to guide you through the 2019 tax filing changes, come see us at Personaltaxprep.com to meet certified tax professionals who know what you can do to minimize your 2019 tax obligation.