In the wake of the Tax Reform and Jobs Act of 2017, many taxpayers seem to have slipped into a seemingly permanent state of uncertainty about its details.
This is perhaps understandable, given the temporary nature of many provisions in the bill.
Our linked article goes some way to relieving any confusion that has persisted into the 2019 tax year, presenting a top-ten list of key provisions for the enlightenment of taxpayers.
This year, the individual standard deduction is set at $12,200 and double that amount for married couples who file jointly. This amount is so high that many people, who in previous tax years chose to itemize deductions, will now forgo that process and limit themselves to the standard deduction.
The limits set on deductions for state and local taxes – $10,000, even for joint filers – further encourages the use of the standard deduction instead of itemizing deductions.
Rules on mortgage interest deduction have been changed, as well. The deduction is restricted to interest on mortgage debut up to $750,000, based on new mortgages taken from 2016-26. Home equity loan interest can be deducted only if the funds are used for repairs or other improvements to the home. A $750,000 limit has been set on the size of the applicable home equity loan.
The medical expense deduction, which was set at an advantageous 7.5% floor for the 2017-18 tax years, has reverted to a 10% floor for 2019.
The personal exemption is suspended until 2026, and in tandem the dependency exemption is also on hold. Taxpayers who used the dependency exemption in earlier years, which averaged $4,000 for each dependent, will have to wait for 2026 to do so again – in 2019, this strategy cannot be employed.
For more information, please read:
Top 10 Tax Facts for Individual Clients in 2019 You Need to Know | ThinkAdvisor