As 2019 winds down, it won't be long before it's time to file your federal income tax return. Hopefully, you've made the necessary adjustments to take advantage of the changes in the tax laws that will apply to your 2019 tax return. Here are some changes to expect on your 2019 tax return when you can get income tax preparation in Reno, NV.
In 2018, if you were required to have health insurance under the Affordable Care Act but didn't get coverage and weren't exempt, you owed a shared responsibility payment, commonly called the individual mandate penalty. For your 2019 return, there is no penalty.
For your 2019 return, the standard deduction for married persons filing jointly is $24,400, up from $24,000 on the 2018 return. The standard deduction for married persons filing separately is $12,200, an increase from $12,000 on the 2018 return. The standard deduction for head of household is $18,350, a hike from $18,000 on the 2018 return. The standard deduction for a single person is $12,200, up from $12,000 on the 2018 return.
For taxpayers who itemize their deductions, instead of taking the standard deduction, the Affordable Care Act raised the threshold for deductible medical and dental expenses to 10 percent from 7.5 percent of the filer's income. The Tax Cuts and Jobs Act lowered the threshold to 7.5 percent for the 2017 and 2018 tax years. Starting in the 2019 tax year, the threshold returns to 10 percent.
For the 2019 tax year, the alimony deduction has been eliminated. For divorce and separation agreements made or modified during 2019 or later, alimony payments may not be deducted. Alimony will not be included as income.
The limits on contributions to retirement accounts are higher for 2019. A 401(k) base contribution limit is $19,000 (up from $18,500). For an IRA base contribution, the limit is $6,000 (up from $5,500).
The contribution limits for a health savings account is up to $3,500 (from $3,450 in 2018) for self-only coverage and $7,000 (up from $6,900) for family coverage.
The 2019 tax return still has 7 tax rates. Here's the breakdown for single taxpayers:
· 37 percent (income of more than $510,300)
· 35 percent for income of more than $204,100 but not more than $510,300
· 32 percent for income of more than $160,725 but not more than $204,100
· 24 percent for income of more than $84,200 but not more than $160,725
· 22 percent for income of more than $39,475 but not more than $84,200
· 12 percent for income of more than $9,700 but not more than $39,475
· 10 percent for income of $9,700 or less
The Alternative Minimum Tax (AMT) exemption increases in 2019 to account for inflation. The AMT exemption amount is $71,700 for single filers, $111,700 for married persons filing jointly, $55,850 for married persons filing separately, and $25,000 for trusts and estates.
Anyone age 65 or older can file a new tax form (1040-SR) for 2019 taxes. The form is simplified and has a large font size. It permits seniors to itemize deductions, and there are no limits on the amount of income that can be reported.
If you need income tax preparation services, call Advantage Tax and Business Services at (775) 622-4804. Preparing income tax returns can be complicated. Get help from our experienced professionals.
Lawrence Wurzel, E.A.