Welcome to the 2019 Tax Year! Doesn’t it feel so good? The answer is always the same in taxes… it depends.
Not many major changes in the tax code when comparing 2018 to 2019. But a couple of highlights to report on. See our Tax Report from December as a guide for 2018 Tax Strategies.
As we are getting closer to filing our taxes for the 2018 tax year, I figured I would review some of the MAJOR changes that occurred for us to remember as we meet with our tax preparers. For those who routinely use the standard deduction, the new standard deduction is either 12,000 or 24,000 (single / married filings respectively) and add an extra 1,300 for those over 65.
What some may not realize is their dependency exemptions are eliminated. Every person “claimed” as a dependent in a taxpayer’s household was previously given a tax exemption of roughly $4,000 each year (the amount was indexed to inflation so it goes up a little each year on average). That has been eliminated, so if you are a family of 5 in your household, your exemption of 20,000 has been eliminated. All hope is not lost, as you’ll see below, the rates have come down quite a bit, and the child tax credit was doubled (from $1,000 to $2,000). While some deductions are gone (like much of the State & Local Tax Deduction) there is some evening out to be done with lower rates.
Looking forward to 2019 now, here is a look at the 2019 Tax Year Federal Marginal Tax Rates. Remember, these rates will apply to income earned in 2019. So the taxes you are about to file will follow tax rates from 2018. See our past post HERE for a look at the 2018 rates.
We are constantly reporting out different strategies for tax planning, so keep a watchful eye on your inbox Friday afternoon when these updates typically go out!
As a housekeeping note: Form 1099 and Form 1099R will be sent to all clients soon. Tax Laws indicate that Form 1099R (1099’s associated with retirement accounts) must be mailed by January 31, so those should arrive by the first of February. Form 1099 (for non-retirement accounts) takes a bit longer because of the more complex nature of calculating dividends, interest, capital gains, capital gains distribution and so on. Those typically will arrive end of February. However, the IRS does allow for a late distribution of March 15th. Please plan accordingly. Those tax forms will be mailed out, but you can also find them (when they become available) on your Online Account View.