High­lights for year two of Trump’s tax plan

Antelope Valley Press - - FRONT PAGE - By SARAH SKID­MORE SELL

It’s that time again.

The IRS be­gan ac­cept­ing and pro­cess­ing tax re­turns for in­di­vid­u­als on Mon­day.

Last year’s fil­ing sea­son was an ad­just­ment for tax­pay­ers and in­dus­try pro­fes­sion­als alike as it was the first un­der a mas­sive over­haul of fed­eral tax law. While this year’s sea­son is ex­pected to be more se­date, there are a few tweaks to be aware of.

Stan­dard de­duc­tion

The stan­dard de­duc­tion dou­bled un­der the new tax law that took ef­fect in 2018. In turn, the num­ber of tax­pay­ers who took that in­stead of item­iz­ing on their taxes jumped sharply. An es­ti­mated 90% of tax­pay­ers are ex­pected to take the de­duc­tion this year.

While the stan­dard de­duc­tion usu­ally in­creases each year for in­fla­tion, it’s worth keep­ing the fig­ure in mind as tax­pay­ers ad­just to the new sys­tem. Some peo­ple may still want to run through the ex­er­cise of de­cid­ing whether to item­ize or not. The de­ci­sion comes down to whether

your de­ductible ex­penses are greater than the stan­dard de­duc­tion. Tax prepa­ra­tion soft­ware or a tax pro­fes­sional can walk you through this with ease.

Sin­gle in­di­vid­u­als now get a stan­dard de­duc­tion of $12,200 and mar­ried in­di­vid­u­als fil­ing jointly qual­ify for a stan­dard de­duc­tion of $24,400. Head of house­hold in­di­vid­u­als get a stan­dard de­duc­tion

of $18,350.

Health In­sur­ance

New this year: There is no longer a penalty on fed­eral taxes for not hav­ing health in­sur­ance, some­thing that was put in place by the Af­ford­able Care Act. How­ever, some states may still pe­nal­ize you for not hav­ing health in­sur­ance, warns Lisa Greene-Lewis, a CPA and tax ex­pert at Tur­boTax.


Any­one who got di­vorced af­ter 2018 and pays al­imony can no longer deduct al­imony pay­ments. And ex-spouses who re­ceive al­imony are no longer re­quired to claim it as in­come. Got di­vorced be­fore 2018? The old rules still apply un­less you up­date your de­cree to state specif­i­cally that the new rules are re­flected.


Congress re­cently passed a bill that in­clude a few tax ex­ten­ders, which re­new tax pro­vi­sions that had ex­pired or were go­ing to ex­pire soon. Here are a hand­ful that you may want to take note of:

— Peo­ple who are re­quired to pay pri­vate mort­gage in­sur­ance along with their mort­gage can once again deduct it. Kathy Pick­er­ing, chief tax of­fi­cer at H&R Block said that this rep­re­sents a sub­stan­tial ex­pense for some — in the $2,500 to $4,500 range.

— Another home-re­lated ex­ten­der: a $500 life­time credit for mak­ing cer­tain en­ergy ef­fi­cient im­prove­ments to your home, such as the pur­chase of a high ef­fi­ciency fur­nace. While many peo­ple have al­ready taken ad­van­tage of this in years past, Pick­er­ing said newer home­own­ers may want to con­sider if they can ben­e­fit.

• Peo­ple who suf­fered a fore­clo­sure and had their debt can­celed just got some relief.

The IRS con­sid­ers that can­celed debt as in­come and there­fore sub­ject to taxes. How­ever, there had long been a pro­vi­sion that would waive this if the fore­clo­sure was on a pri­mary res­i­dence. Last year, that was not the case.

The waiver has now been re­in­stated and is ex­tended retroac­tively, so peo­ple who had to pay tax on a can­celed debt of this sort can file an amend­ment. Pick­er­ing says this is a pro­vi­sion that im­pacts few peo­ple but “has an ex­tra­or­di­nary fi­nan­cial im­pact.”

• To claim med­i­cal ex­penses on your taxes, the total must ex­ceed a cer­tain per­cent­age of your ad­justed gross in­come. That thresh­old was set to go up to 10% this year, mak­ing it harder for as many peo­ple to qual­ify. But the law ex­tended the prior thresh­old of 7.5%.


This July 24, 2018, file photo shows a por­tion of the 1040 U.S. In­di­vid­ual In­come Tax Re­turn form.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.