What's new with taxes this year? We asked accountants
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The 2019 tax season is here and like nearly every year, there’s a variety of changes that will impact your tax returns.
Of particular note, Congress passed the Taxpayer Certainty and Disaster Tax Relief Act of 2019 in December, which extended a variety of tax code provisions through 2020. In addition, some of the changes linked to the Tax Cuts and Jobs Act continue to unfold.
To help you prepare, we asked some certified public accountants to walk us through what to expect this year.
Among the most noticeable changes for this filing season will be the return of deductions and credits that had been available in 2017 but were eliminated in 2018.
“The tuition and fees deduction is back, the residential energy efficient credit is back, and the PMI (private mortgage insurance) deduction is back,” said Laura Fogel, certified public accountant at Gonzalez & Associates.
The tuition and fees deduction allows those who are eligible to deduct as much as $4,000 from taxable income to help cover higher education costs for themselves, a spouse and dependent children.
The residential energy efficient property credit provides incentives for installing alternative energy equipment in your home, while the private mortgage insurance deduction allows filers to claim an itemized deduction for any mortgage insurance premiums paid.
If you would have qualified for any of those credits on your 2018 returns, you can now amend that filing, in addition to claiming them on your 2019 returns, said Fogel.
The standard deduction for single taxpayers has increased to $12,200 from $12,000. Married couples filing jointly receive an increase to $24,400 from $24,000.
Another change impacting 2019 tax returns is the elimination of personal and dependent exemptions — a $4,050 deduction for yourself, spouse and dependents.
“For someone without any dependents, it’s a net benefit. However, families losing out on these exemptions could potentially increase their tax liability,” said certified public accountant Michael Kern, of KORE Talents Consulting.
It’s not all bad news for families with children. To help soften the blow of the elimination of the personal and dependent deduction, there’s been an increase in the child tax credit.
The child tax credit has been bumped up to $2,000 from $1,000 per child. The refundable portion of that has been increased to $1,400 from $1,100.
As of December 31, 2018, the Tax Cuts and Jobs Act eliminated a tax penalty for those who do not have health insurance.
Also, on the health care front, the threshold to claim out-of-pocket medical expenses on your tax returns has been lowered to 7.5% of your adjusted gross income. That means if you spent more than 7.5% of your adjusted gross income on medical or dental care for either yourself, your spouse or any dependents, you can deduct those expenses.
The IRS introduced a new form for this tax season called the 1040-SR, which replaces the 1040-EZ, said Fogel.
The new form is printed with a bigger font than the standard 1040 form. It also has more spacing and is designed with contrasting colors to make it easier to read.
Looking for a full list of 2019 tax deductions? We’ve got you covered. Here are 50 tax deductions you can claim this season.
Image: Nastia Kobzarenko
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