Forward Janesville - TheReport - FirstQuarter 2019

FIRST QUARTER 2019 • 17 ___________ CORPORATE TAXES ___________ The top corporate tax rate was permanently cut to 21 percent (versus 35 percent). ___________ PASSTHROUGH BUSINESSES ___________ Passthrough business owners may now deduct up to 20 percent of their qualified business income. The maximum deduction applies to those making up to $157,500 (individuals) and $315,000 (married couples). ___________ ESTATE TAXES ___________ The “death tax” exemption was doubled, allowing for estates up to $11.2 million to be considered exempt from the tax. ___________ ALTERNATIVE MINIMUM TAX ___________ The AMT was preserved, but limits were relaxed so fewer will be affected. Check with your tax professional, who can advise you based on your filing status. ___________ HOME SALE INCOME ___________ While the exclusions remain the same ($250,000 for individuals and $500,000 for married filing jointly), you now need to have used the home sold as a primary residence for five of the eight years before the sale, versus two of the five years prior, to claim this exemption. ___________ MEDICAL EXPENSES ___________ All taxpayers whose medical expenses exceed 7.5% of their adjusted gross income may now claim this deduction. ___________ 529 COLLEGE SAVINGS PLAN ___________ Benefits now extend to eligible elementary and secondary (K-12) public, private or religious school expenses, in addition to qualified higher education expenses. Up to $10,000 per year per child. ___________ ACA INDIVIDUAL MANDATE ___________ As of January 1, 2019, there is no longer a penalty for consumers who do not purchase healthcare. ___________ ITEMIZED DEDUCTIONS AND OTHER EXEMPTIONS ___________ Some itemized deductions are going away. Personal exemptions have been suspended until 2025, but standardized deductions have increased for nearly all (Individuals: $12,000; Heads of Household: $18,000; Married Couples Filing Jointly: $24,000). Tax preparation fees, investment fees, and work-related expenses may no longer be itemized, through 2025. Moving expenses have also been suspended until 2025, unless you are a member of the military. IRS highlights TAX REFORM CHANGES affecting small businesses Small business owners, self- employed should plan now for new changes As we say goodbye to 2018, the Internal Revenue Service is urging small business owners to learn about how the new tax law changes may affect them. The Tax Cuts and Jobs Act, passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018 and the years ahead. Among other things, the new law may change tax rates and impact the quarterly estimated tax payments required during the year. For many passthrough businesses, the law created a new 20-percent qualified business income deduction. Other deductions and credits have been changed as well, including revised depreciation methods and expanded options for expensing business property. There are also new rules for like-kind exchanges and fringe benefits. In addition, small business employers who provide paid family and medical leave to their employees during tax years 2018 and 2019 may qualify for a new business credit. Business owners can refer to the IRS’s Tax Reform Provisions That Affect Businesses page (https://www.irs.gov/newsroom/businesses) for updates and resources on these topics and other business-related changes. The IRS is highlighting these changes and more as part of its on-going initiative to help small businesses and self-employed individuals understand and meet their tax responsibilities. The IRS has also issued a number of news releases, tax tips, YouTube videos and webinars to help small businesses navigate the new tax law, and more are on the way. Tax tips are written in plain language and people can subscribe to them by using the IRS’s Tax Tips email subscription program (https://www.irs.gov/newsroom/subscribe-to- irs-tax-tips). SOURCE: IRS.GOV Ch-ch-ch-chg BY LAURA BARTEN In additional to tax bracket percentage changes for the majority of filers, here are a few more new things you may want to evaluate with your qualified tax professional come tax time: