The Four Big Tax Law Changes & How They Affect You
We are now right in the thick of 2019 tax season! This is the second year of filing tax returns using the 500-plus pages of tax code changes passed into law in late 2017. To help you plan for the new rules, these are the four biggest changes, and their potential impact on your tax return.
Please note, the new tax laws impact everyone!
TAX RATES ARE LOWER
While five of the seven tax rates drop by 2 to 4 percent, the income ranges of these new rates fluctuate quite a bit. Review where your income now fits using the tax rate chart below.
EXEMPTIONS ARE GONE
The $4,050 income reduction for each exemption is now set to zero. Yes, zero. So your taxable income is now that much higher for each personal exemption you took in 2017.
STANDARD DEDUCTIONS ARE VIRTUALLY DOUBLED
To offset the loss of the personal exemption, the standard deductions are now higher: $24,000 for married joint filers and $12,000 for single filers.
CHILD TAX CREDIT FOR ALMOST EVERYONE
The popular Child Tax Credit is now doubled to $2,000 and with higher phase-outs. Virtually every taxpayer with a qualified child under the age of 17 will see this credit on their tax return.
Remember, everyone will be impacted by the 2017 tax changes. Please be prepared to see these new rules applied to your tax return this year.
Here are some cheat sheets to help you:
Standard Deductions for 2019
Joint or Qualifying Widow $24,000
Head of Household $18,000
Married Filing Separate $12,000
Key Retirement Plan Limits
Traditional IRA, Roth IRA $5500 (+$1,000 50 or over)
401(k), 403(b) $18,500 (+$6,000 50 or over)
Simple IRA $12,500 (+$3,000 50 or over)
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Also, don’t hesitate to give me a call or send me an email if you have any questions at all.
And please get your returns to me sooner rather than later!
Hope you have a great week.