2019 Tax Planning Changes to Keep on Your Radar1 min read
While the 2018 tax filing deadline of Monday, April 15th will be here before we know it, it’s important to be aware of several changes to the tax law that have gone into effect for 2019.
Some were ushered in by legislation such as the Tax Cuts and Jobs Act, the 2016 Consolidated Appropriations Act and the Bipartisan Budget Act of 2018. Still other change are the result of various administrative pronouncements by the IRS.
In 2019, medical expenses will be harder to deduct. For 2018, itemizers could deduct medical expenses to the extent they exceeded 7.5% of the taxpayer’s adjusted gross income. For 2019, the “floor” beneath medical expense deductions increases to 10%.
2019 will come with big changes to alimony payments. For payments required under divorce or separation instruments that are executed after December 31, 2018, the deduction for alimony payments is eliminated. Recipients of affected alimony payments will no longer have to include them in taxable income.
The above rules for alimony payments also apply to payments that are required under divorce or separation instruments that are modified after December 31, 2018, if the modification specifically states that the new-for-2019 treatment of alimony payments (not deductible by the payer and not taxable income for the recipient) applies.
Starting in 2019, the ACA’s individual shared responsibility payment is no more. The Affordable Care Act generally provides that individuals must have minimum essential coverage for health care, qualify for an exemption, or make an individual shared responsibility payment (i.e., pay a penalty) when they file their federal income tax return. The Tax Cuts and Jobs Act reduced the individual shared responsibility payment to zero for months beginning after December 31, 2018.
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