WVEL News Scope Now: New Tax Laws

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“Ahhh, once again, tax season is here!”

There are several new tax laws that are taking effect this year.

The new Tax Laws for 2019 include some of the following :

*Tax Brackets Under the TCJA, there are seven tax brackets for the 2018 tax year, ranging from 10% for taxpayers with incomes below $9,526 ($19,050 for married couples filing jointly) to 37% with incomes above $500,000 ($600,300 for married filing jointly).

*Retirement Contributions IRA contribution limits increase from $5,500 in 2018 to $6,000 in 2019, while 401(k) limits increase from $18,500 to $19,000. Catch-up contributions for taxpayers age fifty or above remain unchanged at $1,000 for IRAs and $6,000 for 401(k)s.

*Healthcare Penalty With the 2019 tax year, the Affordable Care Act’s penalty for not having health insurance will finally disappear. (The penalty does apply for tax year 2018 but you can’t fix that now).

*Withholding Taxpayers will receive a surprise in 2019 if they didn’t adjust their withholding during the 2018 to account for the TCJA’s increase in their take-home pay. Review your withholding at the beginning of 2019 to avoid a tax surprise in April 2020. Failing to pay your taxes or a penalty you owe could negatively impact your credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

*Deductions and Exemptions Personal exemptions are now history. To compensate, standard deductions were increased to $12,000 for single filers ($24,000 for married filing jointly) and the child tax credit was doubled to $2,000 per qualifying child. The standard deduction is also indexed to the C-CPI, increasing them by approximately 2% for the 2019 tax year.

*The $10,000 cap in state and local tax (SALT) exemptions takes effect for the first time with this April’s tax filing. If you’re in a high-tax, high-property-value area, be prepared for a larger tax bill.

*In 2018, the allowable deduction for medical expenses is 7.5%. For the 2019 tax year, the deduction will revert back to the pre-TCJA values of 10%.

*Divorcing couples will see a change beginning in 2019. Currently, alimony payments are tax-deductible for the paying spouse and are taxable income for the receiving spouse. For divorce decrees after December 31, 2018, alimony payments are neither deductible nor considered taxable income.

(Information Courtesy Of WEEK-TV)