2019 Tax Season Changes

It’s that time of the year again – tax season!  Here are a few changes that you may or may not be aware of for 2019 tax returns.  All Forms noted below can be viewed at the IRS website (IRS.gov).

New for 2019, seniors (aged 65 and older) will have their own tax return option called the Form 1040-SR.  The new form is a simplified version of the much larger, more complex Form 1040.  The form allows seniors to claim the standard deduction or itemize their deductions on Schedule A, with fewer income limits or restrictions on types of income like on the prior Form 1040EZ.

On 2018 returns, there were six new supplemental schedules that could build on the Form 1040.  For 2019 tax returns, those schedules have been redesigned and merged into three larger schedules that will hopefully streamline the filing process.

As usual, the standard deduction amounts increased for 2019 returns.  Single and Married Filing Separate (MFS) filing statuses will see an increase to $12,200; Head of Household will go to $18,350; and Married Filing Joint (MFJ) will increase to $24,400.  The increased standard deduction will continue as last year to allow more individuals to file without itemizing deductions on Schedule A.

Starting for 2019 tax returns, the threshold for medical expenses for Schedule A will revert back to 10% of AGI from the two-year break of 7.5%.

The penalty (individual mandate) for not having health insurance no longer applies on 2019 federal tax returns.

Taxpayers who have Qualified Business Income (QBI) will use Form 8995 Qualified Business Income Deduction Simplified Computation to report the calculation for this year.  Form 8995-A will be for more complex QBI computations.

For divorce decrees signed after 12/31/2018 that require alimony payments, the payer will not be allowed a deduction for payments made, nor will the payee be required to claim the alimony as income on their respective tax returns.

401K contribution limits have been increased to $19,000 for the tax year and $6,000 for taxpayers over 50 making catch-up contributions.  IRA contribution limits have also increased to $6,000 with a $1,000 catch-up amount for taxpayers over age 50.

Remember, the information in this material is not intended as tax or legal advice.  It may not be used for the purpose of avoiding any federal tax penalties.  Please consult your legal or tax professionals for specific information regarding your individual situation.