With the Tax Cuts and Jobs Act signed into law, the end of 2018 brought many changes to an average taxpayer’s return. Here are 5 tax changes in 2019 that you’ll need to be aware of as you are filing your 2018 taxes.
Lower Tax Brackets
While there are still seven tax brackets overall, the rates are lower. Hypothetically, this would mean a lower tax bill for some, but be sure to talk to your financial advisor to assess your current situation.
According to the new tax law, eligible taxpayers may be entitled to a deduction of up to 20% of qualified business income (QBI) This rule applies to those who have a sole proprietorship or operate a business through a partnership, S corporation, trust or estate.
2018 was the last year that alimony payments could be considered a write-off (except for those divorces granted in 2018, which will be grandfathered into the 2019 law). Beginning in 2019, those who pay alimony cannot consider it a tax deduction, and those who receive alimony cannot include it in taxable income.
With the new law, the estate, gift, and generation-skipping transfer exemption amount is $11.18 million per individual. This is a temporary provision and will revert back to its former amount in 2026. It’s a good idea to discuss your gifting strategy with your advisor.
Unlike previous years with 1040A or 1040EZ options, there is only one Form 1040 going forward. There are six new schedules, however, so you’ll need to be aware of what schedule to use for your financial situation.
Tax Changes in 2019
If you have any questions about what the tax changes in 2019 mean for you, reach out to Chatterton & Associates to discuss your financial needs with a financial advisor.
The Team at Chatterton & Associates