Tax season is in full swing with the Internal Revenue Service (IRS) processing tax returns since January 27, 2020. This year, there are 7 important filing season changes for 2019 tax returns that you should be aware of. The experts at Orlando, Florida based CPA Accounting & Tax Services can help guide you through these important changes.
The 7 Top Changes For 2019 Tax Returns:
1. New Form 1040-SR for Seniors
If you are 65 or older (or you turned 65 any time in 2019), you will have the option to use a new simple tax form for seniors, known as Form 1040-SR: U.S. Tax Return for Seniors, when you file your 2019 taxes. This form allows seniors to claim the standard deduction or itemize their deductions on Schedule A. Form 1040-SR is similar to the now defunct Form 1040-EZ. There no income limits or restrictions on types of income reported like on the prior Form 1040EZ, so more seniors will qualify to file the 1040-SR. For taxes filed in 2020, the standard deduction for taxpayers over 65 will increase for tax year 2019. The new form was designed to be easier to read with a larger front size and better color contrast. Visit the IRS website at www.irs.gov to view the new form.
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2. Increase in Standard Deductions
The standard deduction amounts for the 2020 tax season will be increased slightly as in previous years. The increased standard deduction will continue to allow more individuals to file without itemizing deductions on Schedule A.
3. Streamlined New Supplemental Schedules
For 2019 tax returns, the 6 supplemental schedules associated with Form 1040 have been streamlined into 3 in effort to simplify and streamline the fling process. Visit the IRS website at www.irs.gov to view the new forms.
4. No More Health Insurance Penalty (for most states)
While the penalty for not having health insurance no longer applies for 2019 federal tax returns, it is important to be aware that some states have individual health insurance mandates, such as New Jersey, Massachusetts and the District of Columbia.
5. Medical Expense Threshold on Schedule A Increases
While on the subject of healthcare, the threshold for medical expenses for Schedule A will increase to 10% of your average gross income (up from 7.5%).
6. 401(k) and IRA Contribution Limits Increased
For taxpayers over 50 years of age making catch-up contributions, the 401(k) contributions limits have been increased. IRA contribution limits have also increased. Be sure to consult your tax professional to learn more about these important changes.
7. Alimony Deduction Eliminated
Any divorce decree signed after December 31, 2018 will disallow a payer to utilize this deduction for payments made. Also, the payee will be required to claim the alimony as income on their tax return.
Filing season changes require an expert. Contact the professionals at CPA Accounting & Tax Services to help guide you through tax season and beyond. We specialize in Business Accounting Services, Individual Tax Services, International Tax Services and Tax Resolution Services. We have offices in Orlando, Florida and service clients worldwide. Find out how we can serve all of your accounting needs by contacting us today: www.cpaaccounting.biz