New Year, New Rules!
Thank you for being a loyal customer!
Tax season is here and there are a lot of changes. The first change is my address. I have finally moved from Vermont back to Virginia.
The IRS will begin accepting tax returns on January 28th. The deadline for tax returns remains April 15th and for Partnerships, March 15th. Your checklist was sent password protected in a separate email earlier this month. I also sent you an invite to my new client portal. It is a secure way to share your documents with me. Please let me know if you have any questions regarding setting up your portal.
What's new for Individuals 2018 and 2019 tax years?
Alimony is no longer deductible by the payor spouse and includible in income by the recipient spouse in 2019. This rule only applies for divorce or separation instruments executed after December 31, 2018, and instruments executed on or before December 31, 2018, but modified after that date to include the new tax laws.
529 Plans will now allow a distribution of up to $10,000 per student to pay tuition expenses for public, private, or religious elementary or secondary school. The rule for post-secondary is unchanged.
Moving Expenses-2018-expires after 2025 Moving expense deduction and exclusion from income provision is allowed only to members of the Armed Forces, spouse and their dependents on active duty that moved because of military orders or permanent change in duty stations. The old moving expense rules are no longer available.
Personal Exemption-2018 is suspended for tax years 2018-2025
Standard Deductions-2018The standard deduction is as follows:Single or MFS - $12,000MFJ or QW- $24,000HOH- $18,000
65 or older, blind per person, per event:MFJ, QW, or MFS- $1,300Single or HOH-$1,600
Medical Expenses 2017 and 2018The threshold for deducting medical expenses is 7.5% of AGI for all taxpayers. It goes back to 10% in 2019.
Taxes Paid-Itemized Deductions-2018The new tax law limits deduction up to $10,000 ($5,000 MFS) for the sum of:state taxes withheldProperty taxes paidTaxes paid for prior year liability
Charitable Contribution-2018
the percentage limit for cash charitable contribution by an individual to a public charity is increased from 50 to 60%.No charitable donation is allowed for payment to a higher educational institution in exchange for which the payer receives the right to purchase tickets or seating at an athletic event.
Miscellaneous Itemized Deduction-2018Expenses that were subject to the 2% AGI limit deduction under the prior law are no longer deductible. These include:investment expensetax preparation feesunreimbursable employee business expensesrepayment of social security benefits
Child Tax Credit and Credit for Other Dependent-2018The child tax credit is increased to $2,000 per qualifying child under 17. The credit is phased out when modified AGI exceeds $400,000 for MFJ and $200,000 for all other taxpayers. There is also a new nonrefundable credit for other dependents of $500 is allowed for each person that is not a qualifying child but is a qualifying dependent under the dependency rules. Therefore a child over 16 that no longer qualifies for the child tax credit may be allowed a $500 credit assuming the dependency rules are met.
Penalty for Not Having Health insurance-2019
Effective 2019 the penalty tax under ACA not having the minimum essential health insurance is zero.
While not an exhaustive list of the changes, these are the most common. As a reminder, your "What If" worksheet was included in your 2017 tax return to give you an idea of what to expect with the new tax law changes.
Looking forward to talking to you in more detail when I do your tax return. Please do not hesitate to email, call or text me if you have any questions. Thanks again for your business.
Andrea Cronmiller, EA
Abcron Enterprises,LLC