The 2018 tax filing season is nearing. But some taxpayers may still worry and feel at a loss about the new federal income tax brackets for 2019. With new policies like this, it’s advisable to work with a former IRS tax attorney because you’ll get adequate guidance and representation if necessary during audits.
In the meantime, you may want to update your knowledge of tax rate changes amid the Tax Cuts and Jobs Act of 2017.
Which Tax Deductions No Longer Apply?
The Tax Cuts and Jobs Act of 2017 did get rid of beneficial deductions and credits. Experts say it’s the largest tax overhaul in 30 years. The law, however, increases the standard deduction and child tax credit.
Here are the 12 tax deductions that no longer exist in 2019:
- Alimony deduction
- Personal exemptions
- Deductions from tax extenders
- The standard $6,350 deduction
- A deduction for moving expenses
- Miscellaneous itemized deductions
- Unlimited state and local tax deductions
- Deductions for certain school donations
- A $1 million mortgage interest deduction
- Deductions for unreimbursed employee expenses
- An unrestricted deduction for home equity loan interest
Most people may not know about these changes until they fill out their tax forms. Those who usually deduct such items may have to pay more in taxes this year. Everyone’s situation, of course, is different. For example, some filers may receive a significant tax break.
What are the Rate Adjustments Due to Inflation?
Inflation may have something to with the adjustments in rates. The changes took effect on the first of January this year. And taxpayers welcomed the New Year with a lot of changes in their taxes.
But the IRS is using a new method in applying adjustments for inflation. The approach, as MarketWatch.com explains, follows a gradually moving measure of inflation. It could affect the amount Americans owe in taxes in the long run.
Here are some of the tax brackets that received slight adjustments for inflation:
- 10 percent for those with an income of $9,700 or less
- 12 percent for those earning more than $9,700
- 22 percent for those with incomes above $39,475
- 24 percent for those with an income over $84,200
- 32 percent for those earning above $160,725
- 35 percent for those with incomes more than $204,100
- 37 percent for those earning over $510,300
The standard deduction for married couples filing jointly varies based on their income tax bracket. Meanwhile, heads of households will have a standard deduction of $18,350, an increase of $350.
Clearly, not everyone is going to feel the pinch of the new tax rates. The fundamental thing to do is to seek professional guidance so that you’re certain of meeting your financial obligations while still being able to get some deductions.
The Right Professional Guidance is Essential
A deduction is always a welcome development when it comes to filing your taxes. All the changes and adjustments, however, can be daunting to go over. As such, it’s better to get assistance from a tax attorney.
California’s Abajian Law explains although CPAs are helpful for general tax questions, they are not beholden to attorney-client privilege. In addition, conflict may arise if the tax returns preparer is also defending an audit.