The IRS has released their tax rate schedules, tax tables and cost-of-living adjustments for 2019. Many of the changes to the income tax provisions also affect trusts and estates. How will these adjustments and the changes brought on by the Tax Cuts and Jobs Act apply to you? In this post, we'll go over some of the most important changes you'll need to know.
The Tax Brackets Have Shifted
The tax rates haven't changed from 2018, but the tax brackets have been adjusted for inflation.
The Standard Deduction Has Increased
The standard deduction has increased from 2018 but personal exemptions remain at zero since they were eliminated as part of the Tax Cuts and Jobs Act.
- Single filers: $12,200 (up from $12,000)
- Married filing jointly: $24,400 (up from $24,000)
- Head of household: $18,350 (up from $18,000)
The Alternative Minimum Tax (AMT) Exemption Amounts Were Adjusted
The AMT, the mandatory alternative to the standard income tax, was adjusted for inflation.
Employee Retirement Contribution Limits Increased
You can save a little more in your 401(k), 403(b) and most 457 plans in 2019. The limits have increased to $19,000, up from $18,500 in 2018. If you are over 50, you can contribute an additional $6,000. IRA contributions are up as well, going from $5,500 in 2018 to $6,000 in 2019.
Schedule A Itemized Deductions Have Changed
- Medical and Dental Expenses - You can only deduct expenses that exceed 10% of your Adjusted Gross Income (up from 7.5% in 2018)
- Pease Limitations - The Pease Limitations, which capped or phased out certain deductions for high-income taxpayers who itemize, has been eliminated
Tax Credits and Deductions Have Been Adjusted
- Lifetime Learning Credit - The Adjusted Gross Income amount used by joint filers to determine their reduction in the Lifetime Learning Credit is $116,000, up from $114,000 in 2018
- Foreign Earned Income Exclusion -The foreign earned income exclusion is $105,900, up from $103,900 in 2018
- Shared Individual Responsibility Payment - The shared individual responsibility payment has been eliminated
Trust and Estate Changes
The tax rate schedule for trusts and estates has changed:
The Gift and Estate Tax Exemption Increased
The amount of money you could bequeath through your estate (or give over your lifetime) and shield from federal estate and gift taxes almost doubled with the start of the Tax Cuts and Jobs Act. Now it has risen again (but not as dramatically) for 2019. The lifetime gift and estate tax exemption will be $11.4 million per individual, up from $11.18 million in 2018. The annual gift exclusion (the amount you can give to someone without having it count towards your lifetime exemption) of $15,000 per recipient will not change for 2019.
For those who file a Schedule C, there will be changes as well.
To completely understand how these changes affect you, consult your team of professionals. Sundvick Legacy Center can walk you through the changes that could affect your estate plan and adjust as needed to ensure your wishes are carried out with the least amount of estate tax liability.
For more detailed information and a complete list of changes, please visit these following sites: