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The 2019 Tax Season is Here!

Happy 2020!!!

Tax season is here again and it’s time to schedule your appointment!

Each new year brings changes to the current tax laws and this year is no exception. Congress enacted, and the president signed, legislation at year-end. The 2020 Consolidation Appropriation Act (‘the Act”), which both funded the government and contained various tax changes, was signed into law on December 20, 2019.

Here are few of the changes:

  • Discharge of qualified principal residence indebtedness: The Act extended the exclusion from income provided for qualified principal residence indebtedness, which the IRC defines as “debt incurred in acquiring, constructing, or substantially improving anu qualified residence of tax payer,” if the debt is also secured by the residence.

The exclusion previously applied for debt discharge before Jan. 1, 2018, but now applies to debt discharge before Jan. 1, 2021. Taxpayers that experienced a discharge of qualified residence indebtedness should consult their tax advisors regarding a possible amendment of their 2018 income tax return.

  • Mortgage Insurance Premiums: Premiums paid for mortgage insurance were, for payments made prior to January 1, 2018, treated as interest payments that were deductible as qualified residence interest (subject to adjusted gross income (“AGI”) limitations). The Act extends this treatment for premiums paid through December 31, 2020.
  • Reduction in Medical Expense Deduction: For tax years beginning December 31, 2016, and ending before January 1, 2019, deductions for medical expenses were generally limited to the amount of such expenses that exceeds 7.5% of AGI. The Act extends this provision through tax years ending before January 1, 2021. As such, tax payers with significant medical expenses will continue to benefit from the lower AGI threshold of 7.5% for 2019 and 2020. The AGI threshold will revert to the customary 10% of AGI in 2021.
  • Deduction for Qualified Tuition and Related Expenses: Qualified tuition and related expenses were allowable as “above-the-line deduction” for tax year prior to January 1, 2018. The amount of deduction was capped at $4000 or $2000 or phased out completely depending upon the taxpayer’s AGI. The Act extended this provision to apply through December 31, 2020. Taxpayers that paid qualified tuition expenses in 2018 should consult their tax advisor regarding amending their 2018 income tax return for potential refund.
  • IRA changes: Individuals were required to take minimum distributions from certain retirement plans (employer-provided qualified retirement plans, certain IRAs, and others) when the owner of the plan reached age 70½. For distributions required to be made after Dec. 31, 2019, with respect to individuals who reach age 70½ after that date, the Act increases the age at which required minimum distributions must begin to 72.

The act also ends the 70½ year age limit for making IRA contributions, and shortens the amount of time some beneficiaries of IRAs may take distributions to a maximum of 10 years.

Don’t worry about memorizing these changes; the Bridge CPAs has you covered and is ready to file your 2019 tax returns.

Also, the 2019 Tax Organizer is ready and attached with this email.

The last day to file your 2019 tax returns is April 15, 2020. But don’t wait until the last minute – please call to schedule your appointment at (703) 942-9476.

Thank you for choosing the Bridge CPAs, LLC to be your trusted tax advisor. We look forward to working with you soon!!!

The Bridge CPAs, LLC

 

 

Please contact us if you have any questions or if you’d like to arrange an appointment. Thank you!


The 2018 Tax Season is Here!

Happy 2019!! Tax season is here again and it’s time to schedule your appointment!

Each new year brings changes to the current tax laws and this year is no exception. The new Tax Cuts and Jobs Act has many people not only thinking about filing 2018 tax returns but also wondering how it would impact your tax filing.

Many of you have called or emailed with questions and we are here to help you navigate the changes. The good news is that we have spent the last few months getting up to speed on the various provisions of the new tax bill.

Here are few of the changes:

  • Standard deduction amount increased to ($12K, $18K and $24K for single, head of household, and married filing jointly, respectively).
  • Increased Child Tax Credits: For families with children the Child Tax Credits is doubled to $2,000 per child. The bill also added a new, nonrefundable credit of $500 for dependents other than children. Finally raised the income threshold at which these benefits phase out from $110,000 for married couple to $400,000.
  • Personal and dependent exemptions: The bill eliminated the personal and dependent exemptions.
  • State and local taxes/Home Mortgages: the bill limits the amount of state and local property, income and sales taxes that can be deducted to $10,000. The bill also caps the amount of mortgage indebtedness on a new home purchases on which interest can be deducted to $750,000.
  • Health care: The bill eliminates the tax penalty for not having health insurance after December 31, 2018. It also temporarily lowers the floor above which out of pocket medical expenses can be deducted to 7.5%.
  • Self-employed (contractors, freelancers, sole proprietors) and small businesses: The bill has myriads of changes for business. The biggest includes a reduction in the top corporate rate to 21%, a new 20% deduction for incomes from certain type of “pass-through” entities (partnerships, S corps, sole proprietorships), limits on expensing of interest from borrowing, and eliminates the corporate minimum tax (AMT).

Don’t worry about memorizing these changes; the Bridge CPAs has you covered and is ready to file your 2018 tax returns.

Also, the 2018 Tax Organizer is ready and attached with this email.

The last day to file your 2018 tax returns is April 15, 2019. But don’t wait until the last minute – please call to schedule your appointment at (703) 942-9476.

Thank you for choosing the Bridge CPAs, LLC to be your trusted tax advisor. We look forward to working with you soon!!!

The Bridge CPAs, LLC