Important Announcement to Our Clients:
2019 retirement contribution limits have increased to $6,000 for IRAs, with a $1,000 additional catchup allowed for those 50 years old and older, and $19,000 for 401k, 403b and most 457 plans, with the $6,000 additional catchup for those 50 years old and older. We encourage our clients to start 2019 on the right path by scheduling some time with us to review their portfolios and their retirement plans.
Tax Cut and Jobs Act of 2017
The passing of the Tax Cut and Jobs Act of 2017 will come into play this coming tax season, when filers will feel its effects with the coming 2018 tax filing season. The effects could either be a welcome change; or some may see an increase to their tax bill, depending on income levels and tax filing status. Below are a few of the major changes to individuals that went into effect in 2018:
- Five of the seven tax brackets have been reduced anywhere from 1 to 4% and the income thresholds for each bracket have been adjusted.
- The standard deduction has been increased from $6,350 to $12,000 for single filers, or from $12,700 to $24,000 for married joint filers, reducing the number of returns with itemized deductions. Limitations have been placed on some commonly used deductions, so even though in the past your deductions have exceeded these amounts, this may still play a role in your return.
- The $4,050 personal and dependent exemptions have been eliminated.
- The Child Tax Credit has been doubled from $1,000 per child to $2,000 per child with an increase in the income eligibility.
- The inheritance tax exemption has been increased to $11.18 million for an individual allowing for a more substantial transfer of wealth.
- The amount of state and local taxes that can be deducted has a maximum of $10,000, whereas these taxes had once been fully deductible.
[pullquote]One thing that remains unchanged– long-term capital gain and dividend tax.[/pullquote]
The above is for general informational purposes only and may or may not be applicable depending on your situation. Please refer to a tax professional for more information.
Alexandra G. Bogusta, CIPM
Performance Analyst,
Operations Associate
Sources:
https://money.usnews.com/investing/investing-101/articles/know-these-6-federal-tax-changes-to-avoid-a-surprise-in-2019
https://www.businessinsider.com/new-irs-tax-brackets-2019-income-tax-2019-1
https://turbotax.intuit.com/tax-tips/irs-tax-return/2017-tax-reform-legislation-what-you-should-know/L96aFuPhc
