2020 will be our 33rd year serving Arizona.
Congress has been busy the last few years changing the tax law. In fact, these last two years have seen more changes than in the last three decades!
As you work toward your tax filings this year, here is some information that may be helpful.
Lower tax rates: The 2019 tax rates range from 10 percent to 37 percent. The thresholds where these rates apply has also changed.
Increased standard deduction: The standard deduction amounts have almost doubled since 2017. For 2019, married couples filing joint, the new standard deduction is $24,400. Fewer people will be itemizing.
Child tax credit: This credit is now $2,000 per child. Also, $1,400 of it is refundable. This means if you have no tax liability, you can get a refund, even if the credit is more than what you owe. This credit has income limitations.
Personal and dependent exemptions: Exemptions are now eliminated. But remember, the standard deductions have almost doubled.
Health care: The tax penalty for not having health insurance is now gone. The floor of which medical expenses in excess of 7.5 percent of adjusted gross income can be deductible has been extended through 2019 by the very recently signed Tax Extender Bill. Previously, the floor was 10 percent.
Credit for nonbusiness energy property: The credit has been extended through 2019. The credit is 10 percent of the amount paid or incurred by the taxpayer for qualified energy improvements (windows, doors, skylights, and roofs) of principal residence. The credits range from $50 to $300 for energy-efficient property, including furnaces, boilers, heat pumps and others. It has a lifetime cap of $500.
Mortgage insurance premiums treated as qualified residence interest: Those premiums are an additional cost you pay each month if your original down payment was less than 20 percent of the sales price. You can treat qualified mortgage insurance premiums as interest for the purposes of the mortgage interest deduction through 2019.
Above-the-line deduction for qualified tuition and related expenses: Through 2019, there is an above-the-line deduction (so you don’t have to itemize to get it) up to $4,000 for qualified tuition and related expenses for higher education. This deduction has income limitations.
And finally, things to remember when it comes to the IRS: The IRS does not:
- Call and demand immediate payment and tell you to use a specific payment method, such as a prepaid debt card, gift card or wire transfer.
- Demand you pay taxes without the opportunity to question the amount they say you owe and advising you of your rights as a taxpayer.
- Threaten to have you arrested.
Paul Toepel is a CPA who has lived in Las Sendas for more than 18 years. His firm, Toepel Company P.C., is a full-service, Mesa based CPA firm offering a variety of services for more than 30 years. These services include tax preparation and representation, accounting, fraud prevention, and QuickBooks set up and support. Their mission is, “To provide exceptional service, knowledge and experience, all while making you and your business successful.”
For more information, call (480) 833-8300, or visit the website at www.toepelcompany.com. The office is located at 2500 S. Power Road, Suite 129, in Mesa.