Impact of Tax Laws in 2019
Special points of interest:
· Individual tax returns are due
April 15, 2020
· Standard mileage rate for 2019 is $0.58, up $0.035 from 2018
· Reminder: health insurance penalty was eliminated at beginning of 2019
· Taxpayers have 3 years from the date the tax return was due to file for a refund. If you haven't filed for your 2016 tax return, you risk losing your refund for that period.
This is the second year since passage of the Tax Cuts and Jobs Act of 2017 (TCJA). This issue will address some of the ongoing tax implications for both individuals and businesses.
Form W-4 Changes
The Employee’s Withholding Certificate (Form W-4) has undergone several revisions to incorporate the new tax laws that took effect in 2018. For example, there is no longer a section for allowances because that was eliminated in the new law. Instead, you can claim dependents or use the deductions worksheet to lower the amount of taxes withheld. Based on the revised law, the tax tables have also been updated. So, if you have an existing W-4 based on the previous tax law, it could be a good time to check to see if an update is needed. Refunds may change. If you owed or if your refund was substantially higher in 2019, this could be a good indicator that your W-4 needs to be updated.
Qualified Business Income
The qualified business income (QBI) deduction allows eligible self-employed and small business owners to deduct up to 20% of their QBI on their taxes. The following types of entities qualify for the QBI deduction:
· Limited Liability Companies
· Sole Proprietorships
If your total taxable income (that means all income – personal and business) is at or below $160,700 ($321,400 for joint filers), then in 2019 you might qualify for the 20% deduction on your business income.
QBI excludes the following types of income from the deduction:
· Capital gains or losses
· Interest income
· Income earned outside of the
· Certain wage and guaranteed payments made to partners and shareholders
We can walk you through the requirements to make sure your business receives the proper deduction if eligible.