Will the 2019 Tax Changes Affect You?

Special article brought to you by Pinnacle Accountancy Group

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At Pinnacle Accountancy Group of Utah, we strive to be TAX ADVISORS, not just tax preparers. We empower our clients with knowledge of new tax laws so, with our help, they can put their families in the position to pay the least amount in taxes. In December, 2017, Congress passed the Tax Cuts and Jobs Act. This Act made sweeping changes to the tax laws affecting everyone for 2019 and moving forward. Here is a summary of those tax changes and how they may impact you.

INDIVIDUAL TAX RATES:

The individual income tax rates for 2019 range from 10% to 37% depending on your taxable income. Capital gain rates range from 0-20% depending on the income tax bracket. For example, taxpayers in the 10% or 12% income tax bracket will pay 0% on capital gains. Taxpayers in the 37% income tax bracket will pay 20% on capital gains.
ALIMONY:

Alimony from divorce agreements entered into after December 31, 2018 is no longer deductible. Alimony from divorce agreements entered into before December 31, 2018 will remain deductible for the duration of the agreement.

STANDARD DEDUCTION:

For 2019, the standard deduction for each filing status is Single – $12,200, Head of Household – $18,350, and Married Filing Jointly – $24,400.

CHILD TAX CREDIT AND FAMILY CREDIT:

The Child Tax Credit is a $2,000 credit available for dependents age 16 or younger. The Child Tax Credit is phased out starting at taxable income of $200,000 for single and $400,000 for married filing joint returns. This means that more families will benefit from this credit. The Family Tax Credit is a new $500 credit available for dependents age 17-24 with similar phase out rules.

QUALIFIED BUSINESS INCOME DEDUCTION:

The Qualified Business Income Deduction is a 20% deduction of business income available to all sole proprietor and pass-through businesses. This deduction will reduce taxable income, which, in turn, will reduce taxes.

HEALTH INSURANCE:

The individual mandate to have health insurance is no longer in effect for 2019, so there is no penalty for Taxpayers that do not have health insurance. Health insurance credits are still available and may have to be paid back depending on income level.
You can still contribute up to $7,000 into a Health Savings Accounts (HSAs) and/ or $6,000 into an Individual Retirement Accounts (IRAs) for 2019. The contributions must be made by April 15, 2020 to be deductible on the 2019 return.

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