The Tax Cuts and Jobs Act went into effect earlier this year. This new tax law brings significant changes to our taxes in 2019. Since the implementation of the tax bill there have been numerous articles and news reports on how the tax bill will change the tax structure for parents, seniors, and businesses. Here are four of the key considerations that you should familiarize yourself with as we move through this year.
1. The increase in the standard deduction. The new law almost doubles the standard deduction. Previously, the amount was $12,000 for single individuals and $13,000 for married couples. The new amount has been raised to $24,000.
2. Removal of the personal deduction. Previously, the personal deduction was for $1,000. Under the new tax bill, the personal deduction is being eradicated. The impact is believed by many to be lessened due to the increase in the standard deduction but this is still an issue you and your CPA need to discuss.
3. Preservation of the medical expense deduction. For the next two years, Americans with high medical expenses will be able to deduct them. Specifically, medical expenses that exceed 7.5 percent of a person’s annual gross income will be able to be deducted. This also includes out of pocket expenses and premiums that were not paid with pre-tax dollars.
4. The change to 529 plans. 529 plans are a way to save for your child’s education. These plans can now be used not only for college tuition but for private education in grades kindergarten through high school. This can have a significant savings for families who need to pay for more than just college education.
Whether you are a retiree, a member of The Sandwich Generation, or a parent with young children, you need a basic understanding of the changes to plan for your next year and the future. Does this article raise questions for you? Don’t wait to discuss it with a member of our legal team.