As a result of the 2018 passage of the Tax Cuts and Jobs Act (TCJA), there are new tax regulations coming into play in 2019. These changes will affect your tax returns on taxes filed in April 2019 and April 2020. While this has been referred to by many as a “tax overhaul,” the playbook isn’t entirely different, though there are a few things you should know and a few critical alterations you may need to make when filing your taxes this year.
New Year, New Tax Brackets
The TCJA outlines seven tax brackets, which are as follows:
- 10% for individuals, joint-filing couples, and heads of household with taxable income over $0
- 12% for individuals who make over $9,525, jointly-filing couples who make over $19,050, and heads of household with taxable income over $13,600
- 22% for individuals who make over $38,700, jointly-filing couples who make over $77,400, and heads of household with taxable income over $51,800
- 24% for individuals who make over $82,500, jointly-filing couples who make over $165,000, and heads of household with taxable income over $82,500
- 32% for individuals who make over $157,500, jointly-filing couples who make over $315,000, and heads of household with taxable income over $157,500
- 35% for individuals who make over $200,000, jointly-filing couples who make over $400,000, and heads of household with taxable income over $200,000
- 37% for individuals who make over $500,000, jointly-filing couples who make over $600,000, and heads of household with taxable income over $500,000
Changes in Deductions and Exemptions
When filing your taxes in 2019, keep in mind that there will be no personal exemptions for the 2018 tax year. However, standard deductions have increased and are now as follows:
- Single: $12,000
- Married filing jointly and qualified widow(er)s: $24,000
- Married filing separately: $12,000
- Head of household: $18,000
The child tax credit has also increased to $2,000 for each qualifying child.
For couples divorced before December 31, 2018, alimony payments are still tax-deductible for paying spouses and are considered taxable income for the spouse receiving alimony. However, couples divorced on or after January 1, 2019, alimony will no longer be considered tax-deductible or taxable income.
In the 2018 tax year, the allowable tax deduction for medical costs is 7.5%.
New Rules for Retirement Contributions
Contribution limits for IRAs are $5,500 for the 2018 tax year. 401(k) contribution limits are $18,500, and catch-up contributions for adults age 50 or older with IRA and 401(k) accounts are still $1,000 and $6,000, respectively.
Find Out How New Tax Laws Will Affect You and Your Family
At Carrie Warner Attorney at Law, we provide you with the insight you need to avoid a skirmish with the IRS this year and keep your financial ducks in a row amid the changing American tax landscape. Columbia Family Lawyer Carrie Warner is well-versed on the recent tax law changes and how they will affect you and your loved ones, especially for clients who have experienced or are currently undergoing divorce, separation, and other such changes in legal or familial status.
For personalized counsel and trustworthy advice, connect with a member of our team today by calling (803) 994-8173.