Some of the changes in the Tax Cuts and Jobs Act of 2017 tax reform law are still taking effect, so you can expect some differences in your next tax return. We are nearly at the cutoff point for this year’s tax filing due by April 2020. Take a look at some of the tax changes that could affect your next tax filing.
Tax Changes for 2020
An Increase in HSA Contribution Limits
If you have a health savings accounts (HSA) for yourself or your family, the amount you can contribute has risen. For self-coverage, you can now contribute $3,500 and for family coverage, you can contribute $7,000.
An Increase in Standard Deductions
Thanks to inflation, standard deductions are higher this year, which lessens the amount of your income that is subjected to taxation by the federal government. If you are single, you won’t be taxed on the first $12,200 of your taxable income, while if you are married filing jointly, you won’t be taxed on the first $24,400 of your taxable income.
Individual Mandate Penalty
The individual mandate penalty is zeroed out this year, so 2019 is the year that the change to the shared responsibility payment takes effect. If you were required to get health insurance coverage under the Affordable Care Act, (ACA) and didn’t get it or qualify for an exemption, you won’t have to pay the penalty.
Medical Expense Deduction Increase
The higher medical expense deduction threshold kicks in this year as the deductible for medical and dental expenses was raised from 7.5% to 10% of adjusted gross income by the ACA. Now your medical and dental expenses need to be more than 10% of your 2019 adjusted gross income for it to be deductible.
The Tax Cuts and Jobs Act change regarding the elimination of the alimony deduction kicks in this year so alimony payments are no longer deductible. If you pay alimony, you can’t write off the payments anymore, and if you are getting alimony, you can’t count the payments as part of your income. This only applies to those that executed their divorce agreement after 2018. Those that had a divorce agreement in 2018 and prior still report the income and deduction.
Increase in Retirement Contribution Limits
If you have a retirement account, this is the year that you can place more money into your accounts like your
401(k), IRA, or other retirement plans you may have, and the amount will be deductible on your next tax return.
Increased Income Brackets
Income tax brackets increased in 2019 because of inflation. If you are single, the tax rate is now 10% if you made $9,700 or less, 24% if you make more than $84,200 (but less than $160,725), and 37% if you make more than $510,300. (See IRS Revenue Procedure 2018-57 for more numbers.)
Corporate Capital stays on top of all IRS tax laws so that our clients receive the most accurate information needed for themselves or their business. To make the most of the changes in the tax code for your business or personal taxes, Corporate Capital is ready to assist you! Working with our financial experts in Las Vegas, Nevada, you will have access to the following:
-A certified public accountant
-A quarterly review of your tax liability position and profit and loss, that can help you lessen your tax in the following year
-A review of your business expenses so you get the maximum tax deduction and legal minimum in tax payments to build your revenue
-Federal and state tax return preparation that complies with taxpayer reporting
-A review of previous taxes to see if you can save more in taxes
-Consulting and research resources year-round for any tax solutions that grow your business
-Professional advice on avoiding tax consequences regarding your business’s incorporation process
-A minimal tax liability
-Tax advisory and accounting support with Corporate Capital’s partners when it comes to IRS audits or the state revenue agency
We invite you to call our experts at 855-371-0070 today to schedule your FREE consultation. Join the over 13,000 clients around the country our Corporate Capital team has helped over the past 30 years with the most tax-savvy advice to date. To enlist our services, please call 855-371-0070 to book your FREE consultation!