Are you considering adopting a child with special needs in 2019? If so, the adoption tax credit will be $14,080. The maximum credit allowed for other adoptions will be the amount of qualified adoption expenses up to $14,080. The credit will begin to phase out for taxpayers with modified adjusted gross income (MAGI) in excess of $211,160 and the phaseout will be complete with a MAGI greater than $251,160.
The Tax Cuts and Jobs Act suspended personal exemptions for 2018–2025, but roughly doubled inflation-adjusted standard deduction amounts. For 2019, the amounts are $24,400 for married joint filers, $12,200 for single filers, $18,350 for heads of households and $12,200 for married couples filing separately. For an individual who can be claimed as a dependent on another’s return, the standard deduction is $1,100, or $350 plus the individual’s earned income, whichever is greater.
The IRS has issued its inflation-adjusted tax figures for 2019. For the earned income tax credit, the maximum amount of earned income on which the credit will be computed is $6,920 for taxpayers with no qualifying children and $10,370 for taxpayers with one qualifying child. The phaseout of the allowable credit will begin at $14,450 for joint filers with no qualifying children and $24,820 for joint filers with one or more qualifying children.
U.S. House GOP lawmakers postponed a vote on their tax package. It includes the “Retirement, Savings, and Other Tax Relief Act of 2018” and the “Taxpayer First Act of 2018.” Lawmakers said the decision was due to the absence of several GOP members who lost their re-election bids. The package addresses retirement savings, tax extenders, disaster relief, technical corrections and IRS reform. Senate Democrats indicated they have little enthusiasm for voting on the recently introduced legislation.
The IRS continues to warn taxpayers that they may be at risk for receiving a surprise tax bill due to the Tax Cuts and Jobs Act (TCJA). The IRS noted that while the TCJA lowered tax rates for most taxpayers, it also nearly doubled the standard deduction and limited or discontinued many deductions. As a result, some taxpayers may have too little tax withheld from their pay. Many employees have few paychecks left this year,
Tax forms get a remodel. The Tax Cuts and Jobs Act has brought many changes, including physical modifications to some tax forms. Form 1040 is now significantly smaller and has far fewer lines. Also changed is the due date listed. While the tax filing deadline for most taxpayers is 4/15/19, calendar year filers who live in Maine and Massachusetts will have until 4/17/19 to file. Forms 1040A and 1040EZ have been eliminated for 2018,
The TCJA didn’t change the research credit, but it has an impact on the credit. Previously, corporations subject to alternative minimum tax (AMT) couldn’t offset the research credit against AMT liability, which erased the credit’s current benefits. By eliminating corporate AMT, the TCJA removed this obstacle. Pass-through businesses can still claim the credit against AMT if their average gross receipts are $50 million or less. And qualifying start-ups without taxable income can still claim the credit against up to $250,000 in payroll taxes.
The IRS reminds taxpayers to take advantage of their employers’ Flexible Spending Accounts (FSAs) in 2019. For 2019, the contribution limit is $2,700. If an employer chooses, employees can carry over up to $500 of unused funds into 2020. Otherwise, FSAs have a “use or lose” provision. FSAs provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Amounts contributed aren’t subject to federal income tax,
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