The Tax Cuts and Jobs Act of 2017 was signed into law a year and a half ago, but not all of its provisions took effect right away. In fact, many of the law’s sweeping changes will first become part of your life this year. If you’re wondering how the law will affect you, you should be aware of these changes.
Beginning in 2019, payors of alimony can no longer claim the payments as deductible, and recipients of alimony do not have to report it as taxable income. If you are already paying or receiving alimony, the new law will not affect you; the changes apply to you only if you get a divorce after December 31, 2018.
In the past, you had to pay a fee if you did not have health insurance. Starting this year, you no longer have to pay that penalty.
In the past, you could deduct any medical expenses that exceeded 7.5 percent of your adjusted gross income (AGI). Going forward, you can deduct only those expenses that exceed 10 percent of your AGI.
The standard deductions are increasing to $12,200 if you are single, $18,350 if you are a head of household, and $24,400 if you are a married couple filing jointly.
Federal Mileage Rates
Federal mileage rates are increasing to 58 cents per mile for business deductions. Charity and medical mileage rates are staying the same (14 cents per mile for charity, and 20 cents per mile for medical).
Retirement Contribution Limits
Retirement contribution limits are changing to $6,000 for IRAs and $19,000 for 401(k), 403(b), and 457 plans. If you are over the age of 50, the limits are $7,000 for IRAs and $25,000 for the other plans.
If you need help with your taxes, you can always turn to The Royce CPA Firm. We are here to provide you with convenient, affordable, and expert services for you and your business. That way, you can head into tax season with confidence. When you’re in need of a certified public accountant in Tucson, call our office today!