It’s never too early to plan ahead! While we are still in the midst of preparing 2018 taxes for April 2019, the IRS has just released several changes that will impact next year’s tax returns. These 2019 tax year adjustments are to be used on tax returns filed in 2020 and were designed to adjust for inflation. Some of the more relevant to the majority of taxpayers are described here.
To begin, the standard deduction increases for everyone. For married filing jointly it rises $400, for single taxpayers and married individuals filing separately it goes up $200. Heads of households will experience a $350 increase from the prior year.
Many other deductions, exemptions, and credits will realize various increases for tax year 2019 as well. Among these are the Alternative Minimum Tax exemption, which sees both an increase in the exemption amount and the phase out dollar figure. Additionally the Earned Income credit increases when filing jointly with three or more qualifying children. The amount allowed for qualified adoption expenses increases incrementally as well. There will be no penalty for not having minimum health coverage in 2019.
As can be seen, the number of changes and the intricacies are wide ranging. Over 60 tax provisions were adjusted for 2019. For a complete list of these tax inflation adjustments, the IRS website contains a detailed list. Our office is open for questions as well. While many of these increases are small, the amounts can add up depending upon your filing status and qualifications!