2019 was the second tax year affected by the Tax Cuts and Jobs Act. Most regulations stayed the same as in 2018, but there are a few changes and adjustments to be aware of when helping your clients file their returns this tax season.
For tax year 2019, there are seven tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The tax brackets adjusted for inflation are:
The tax rates for trusts and estates are: 10%, 24%, 35%, and 37%.
The standard deduction for single taxpayers and those married filing separately increased by $200 to $12,200. For taxpayers who are married filing jointly, the standard deduction increased by $400 to $24,400, and for heads of households the amount increased by $350 to $18,350.
While most deductions and credits remained the same for 2019, a few things have changed that will affect 2019 returns.
Lifetime Learning Credit
The adjusted gross income amount used to determine the Lifetime Learning Credit is $116,000—$2,000 higher than in 2018.
Foreign Earned Income Exclusion
The foreign earned income exclusion is up $2,000 from 2018 to $105,900 for the 2019 tax year.
The “floor” for deducting medical and dental expenses increased to 10%, up from 7.5% in 2018.
The Saver’s Credit
The income limits for the Saver’s Credit have increased to $64,000 for those married filing jointly, $48,000 for heads of household, and $32,000 for single taxpayers and those married filing separately.
This post is an excerpt from our ebook 7 Things to Know for Tax Year 2019. You can download the whole thing here.