New year – new rules for taxes. If you haven’t already begun the filing for your 2019 tax returns, the following article discusses some of the ways your 2019 federal return may differ from previous years. TaxAudit offers tax audit defense services, helping tax filers ensure their returns are protected. Whether you’re an individual filer or filing for your business, TaxAudit gives you the tools and resources you need to protect your interests.
The due date for your 2019 tax returns is coming close – did you know that your tax return may look a little different this year?
While tax returns generally vary from year to year due to how inflation affects retirement account contributions and standard deductions, several elements within the 2017 federal tax reform law (Tax Cuts and Jobs Act) took effect in 2019, so there are numerous aspects that may influence your returns. Here are five ways your federal return may be impacted.
1. The shared responsibility provision no longer applies.
Remember how the Affordable Care Act required people without health insurance – either private insurance or coverage through a state marketplace – to pay a penalty? The 2017 federal tax reform law eliminated that penalty, also known as the individual mandate. If you didn’t have health insurance in 2019, you will no longer be required to pay the penalty due when you file your taxes.
2. No more deductions for alimony for divorces that took place in 2019 and after.
If you paid alimony for a divorce that took place in 2019, you will not be able to deduct those payments from your federal taxes, according to the 2017 tax reform law.
3. Alimony no longer counts as income.
While those who started paying alimony in 2019 won’t get the benefit of deducting those payments from their taxes, those who started receiving alimony in 2019 won’t have to claim it as income.
4. Retirement account contribution limits are higher.
The amount of money you are allowed to put into various retirement accounts was raised. Here are the contribution ceilings for 2019 tax returns:
- $19,000 for 401(k) base contribution
- $6,000 IRA base contribution
The 401(k) catch-up contribution ($6,000) and the IRA catch-up contribution ($1,000) are unchanged.
5. Income brackets are higher.
The income tax brackets for 2019 are higher than in previous years due to inflation rates. The 2019 tax brackets for single filers are as follows:
- 37%: Incomes over $510,300
- 35%: Incomes from $204,101 to $510,300
- 32%: Incomes from $160,726 to $204,100
- 24%: Incomes from $84,201 to $160,725
- 22%: Incomes from $39,476 to $84,200
- 12%: Incomes from $9,701 to $39,475
- 10%: Incomes $9,700 and under</li></ul>
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