When the 2018 tax reform law was passed, it had many of our clients taking a closer look at how they did their taxes. While most of those changes went into effect last year, there are still a few things that will be different when you file your 2019 taxes that are due April 15, 2020.
Here are the main highlights:
Income tax brackets increased in 2019 to account for inflation.
When calculating your taxes, your tax rate (the percentages of your income that you pay in taxes) is based on what tax bracket (income range) you’re in. For the 2019 tax year, the tax rates are the same—but there are some slight changes to the brackets. The brackets have been adjusted by a few hundred dollars from 2018 to account for inflation, and while you may not notice much of a difference, this could shave a couple hundred dollars off of your tax bill.
The standard deduction increased to $12,200 for single filers and $24,400 for married couples filing jointly.
The standard deduction is an automatic reduction in your taxable income. When you calculate your tax liability, you have the option of taking the standard deduction or itemizing your deductions. If you itemize, you calculate your deductions one by one. Itemizing takes more work, but it’s worth it if your itemized deductions exceed the amount of the standard deduction.
Keep in mind that every situation is different as far as whether you should take the standard deduction or whether you should itemize. Talk to us to figure out what is best for you!
There is no longer a penalty for not having health insurance coverage.
While the Affordable Care Act is still around, the penalty you owed if you didn’t get health insurance is not. The change went into effect for the 2019 tax year, so that means the penalty for not having health insurance is gone.
If you would like to discuss how any tax changes affect your tax situation, please reach out to us at Huth Thompson.