Once again a new year is behind us and income taxes are coming. In this most unusual tax season of 2019, all Americans will be seeing changes on their tax returns. Congress continues to discuss last minute income tax bills as of the date of this letter, and you can be assured we stay abreast of all the latest changes as they occur!
We are once again making our tax organizers available, for free, to anyone who requests one. If you have not used one in the past, please call the office to request one for 2019, as it is our attempt to be as thorough as possible in the preparation of your return. If you received an organizer last year, we will mail this year’s organizer to the same address. The tax organizer may not be enough however, and we wanted to bring some special items to your attention below.
Specifically for 2019 we will need our clients identity verified, a copy of your drivers license will be needed.
Affordable Care Act (ACA)
All tax payers will receive form 1095-A if they went to the Marketplace (Obamacare). We must have this form to prepare your taxes. If you obtained your health insurance from either your employer or yourself, we will need proof.
If you did not receive a 1095, we must ask you a number of additional questions about insurance coverage so that we can help you avoid any penalties for failure to have health insurance.
2019 is the last year of the Mandate requiring coverage or penalty's can be assessed. So there will no longer be a requirement for Health Insurance, hence no penalty.
The personal exemption has been eliminated for all people. However, the standard deduction is now; $12,200. for single/MFS, $24,400. for MFJ, $18,350. for HOH. The blind exemption is now $1,300.
Child Tax Credit (CTC) is $2,000. per dependent child under age 17. $1,400. can now be refundable.
Family Tax Credit (FTC) is $500. for any person who qualifies as a dependent but is not eligible for the CTC. ie mother, father, etc.
ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter should show the date and amount of any individual contribution over $250 and should also state that no goods or services were received in return for the contribution. With the advent of the new standard deductions a possibility exists, you will not be itemizing your charitable contributions.
We must obtain form 1098 from you when you pay mortgage interest. Additionally, we must obtain refinancing closing statements, and if you drew money out on a home mortgage or refinancing, we must have general information on the use of the money according to the IRS. As with charity, mortgage interest, real estate taxes may not qualify under the new Standard Dedication amounts.
Children/Student Tax Returns
Under absolutely no circumstances can you allow your dependent children or college students to file their own returns this year. We must file their return because of the Affordable Care Act. Allowing a child to file their own return, particularly a student, can cost the child and parent literally thousands of dollars in Heath Care penalties and/or credits.
If you own rental property, this year the IRS has demanded substantially more information. We now need, FOR EACH PROPERTY SEPARATELY, the physical location, type of property (single Family, duplex, etc.), Form 1099-K received, and a record, by property, of the number of days rented and the number of days used for personal purposes.
Effective 2019, the amount you may give one person in one year without any return filing requirements was increased to $15,000. Very few Americans need to worry about Federal estate taxes because of changes in the estate tax limit at the Federal level.
There is still time to setup an appointment for year-end tax planning by December 31st. We recommend a meeting if you have had any major changes during 2019 or are expecting major financial changes in 2020, such as retirement, inheritances, etc.
There are many more changes to the tax code, but don't worry, that's what we are here for,
give us a call.