With the Tax Cuts and Jobs Act now in full effect, there may be several key changes to your tax return preparation. From new tax brackets to a higher standard deduction, the law may increase or decrease the size of your refund check. With the deadline clock ticking down, it’s not too late to learn everything you need to know about the tax changes for 2019.
The Top 5 Tax Changes for 2019
1) New Tax Brackets
- For example, the income tax rate of the top bracket was lowered, from 39.6 percent to 37 percent.
2) Higher Standard Deduction
One of the biggest tax changes for 2019 is an adjustment to the standard deduction. The law nearly doubled it.
- Single people or those who are married but filing separately will now be able to take a $12,000 standard deduction, instead of $6,350.
- For married couples filing jointly and heads of households, the standard deduction allowable is now almost double what it was just a year before.
3) No more Personal Exemption
The new federal income tax law gives many new incentives, but it stops short of allowing a double tax break. In an effort to simplify the tax code, lawmakers folded the personal exemption into the new standard deduction. If you were able to claim multiple personal exemptions in the past, you might feel a pinch this tax season.
- Although the standard deduction increased significantly, the popular $4,100 personal exemption has been eliminated.
4) The Child Tax Credit Doubled
While the end of the personal exemption may hurt some families, a revised child tax credit may help to cushion the blow. This credit is now larger, more refundable and has less restrictive income limitations.
- This year, the Child Tax Credit is double what it was on your 2018 return.
- You can now claim $2,000 per qualifying child under the age of 17.
5) Mortgage Interest Changes
In previous tax years, many Long Island homeowners took advantage of the deduction for mortgage interest. Although this tax incentive still exists, its rules are slightly different in 2019.
- The tax deduction’s limit has been reduced to the interest of up to $750,000 of qualified residential debt or mortgage principal on a primary or secondary home. It was previously set at $1 million.
- Additionally, the tax changes for 2019 removed a provision that allowed taxpayers to deduct interest on as much as $100,000 of home equity debt.
Depending on your income level and life situation, these tax changes for 2019 may substantially alter the size of your tax refund check. If you have any questions about personal income tax preparation, contact a local tax accountant.