While Tax Day may feel like worlds away, it is already time to start preparing for April 15, 2020. If you haven’t yet thought about your tax strategy since last April, it is probably time to consider the types of changes you can implement. You may want to consider adjusting your retirement contributions as well as your withholding — you don’t end up owing money when tax season rolls around.
With new stipulations coming into effect from the Tax Cuts and Jobs Act, it is also crucial to read up on the latest tax laws. Learn more from the experts at Paramount Tax Relief in Sacramento and start your tax preparation today.
Changes to Expect When Filing Your 2019 Taxes
The Tax Cuts and Jobs Act was passed in 2017, but some crucial components did not take effect until this year. Check out some of this year’s additions and get yourself braced for April 2020.
- Increased Standard Deductions and Higher Tax Brackets — Deduction amounts and income tax brackets have both been increased as a result of inflation.
- Higher Health Savings Account Limits — Contributions for those eligible for this account have been upped to $7,000 for family coverage and $3,500 for self coverage.
- Increased 401k and IRA Contribution Limits — Higher contributions to your retirement fund decrease your taxable income, saving you money while also preparing you for the future. Contribute up to $19,000 for the base contribution or $6,000 for those over 50 making catch-up contributions. Individual retirement accounts (IRAs) have been upped for the first time since 2013, moving to $6,000 for base contributions and a $1,000 catch-up allotment for those over 50.
- Alimony Deduction Eliminated — Those making alimony payments will not be permitted to write them off as a deduction, nor will recipients be allowed to list them as an income. This applies to all divorce decrees signed after 12/31/2018.
- Individual Mandate Penalty Eliminated — In the past, certain individuals without health insurance were subject to a fine that was required to be paid when taxes were due. Certain states, however, still require health coverage and will impose a fee when you file in 2019.
- Increased Medical Expense Threshold — In order for out-of-pocket medical expenses to qualify as a deduction on your 2019 tax returns, they must exceed 10 percent of your income, as opposed to the previous threshold of 7.5 percent.
Among these many changes, the IRS has also taken steps to streamline the filing process, which includes a new form (1040-SR) for senior taxpayers (those over 65). Larger fonts and better color contrast are two components implemented to simplify the filing experience. Additionally, new supplemental schedules have been consolidated from six to three.
Learn More From Paramount Tax Relief Serving Sacramento
At Paramount Tax Relief, our professionals can assist you with any of your tax-related questions and help you prepare for the arrival of tax day. We are committed to customer satisfaction and understand what it takes to keep those in the Sacramento area satisfied with our services.
For more information, please don’t hesitate to contact us today!