Article Highlights:
Vehicles Beginning Phaseout out 2019
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Date Acquired
>>> Vehicle |
Before 2019
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Jan - Mar 2019
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Apr - June 2019
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July - Sept 2019
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Oct - Dec 2019
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Jan - Mar 2020
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After Mar 2020
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Tesla*
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$7,500 | $3,750 | $3,750 | $1,875 | $1,875 | $0 | $0 |
Chevrolet*
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$7,500 | $7,500 | $3,750 | $3,750 | $1,875 | $1,875 | $0 |
Cadillac*
|
$7,500 | $7,500 | $3,750 | $3,750 | $1,875 | $1,875 | $0 |
Qualified Opportunity Funds – Taxpayers who receive capital gains on the sale or exchange of property (if the other party is unrelated) may elect to defer – and, potentially, partially exclude – those gains from their gross income if they are reinvested in a qualified opportunity fund (QOF) within 180 days of the sale or exchange. The amount of the gain (not the amount of the proceeds, as in Sec. 1031 deferrals) needs to be reinvested in order to defer the gain. The deferral period ends when the QOF investment ends or on December 31, 2026 – whichever is sooner. At that time, taxes must be paid on the deferred gain.
However, 10% of the deferred gains are forgiven QOF investments have been held for at least 5 years, and 15% of the gains are forgiven when those investments have been held for at least 7 years. Note that, with the deferral end date of December 31, 2026, qualifying for the 15% forgiveness requires a QOF investment on or before December 31, 2019.
Seniors Get a Special Tax Form – Lawmakers have long sought to provide taxpayers who are age 65 and older with a simplified tax form in place of the Form 1040. In the 2018 budget bill, Congress finally included a requirement that the IRS create such a form. As a result, the IRS will introduce Form 1040-SR, which will look a lot like the old form looked before the 2018 tax reform instituted its (politically motivated) division of the Form 1040 into multiple postcard-size schedules. It is unclear how much simpler the Form 1040-SR will be, but it will be available for 2019 returns. Form 1040-SR will be optional.
Family and Medical Leave Credit – The employer credit for family and medical leave, which was created in the 2017 tax reform, ends after 2019. This two-year program provides employers with a tax credit equal to 12.5% of the wages they paid to qualifying employees during any period when those employees were on family and medical leave, provided that the rate of the leave payments are at least 50% of the employees’ normal wages. The credit can be claimed for a maximum of 12 weeks of leave for any employee during the tax year. For each percentage point for which the leave payments exceed 50% of normal wages, this credit increases by 0.25 percentage points (up to a maximum of 25%). Participation in this credit program is optional.
Inflation Adjustments – Just about every tax-related value is adjusted for inflation. Some values are adjusted for any level of change, but others are adjusted only if the change reaches at least a specific dollar amount (so these values may not change every year). The table below includes the actual 2019 inflation adjustments and the projected 2020 adjustments for some of the most frequently encountered values.
Year | 2018 | 2019 | 2020 |
Standard Deduction | |||
Single or Married Filing Separately | 12,000 | 12,200 | 12,400 |
Head of Household | 18,000 | 18,350 | 18,650 |
Married Filing Jointly | 24,000 | 24,400 | 24,800 |
Additional Standard Deduction (Age 65+ or Blind) | |||
Unmarried | 1,600 | 1,650 | 1,650 |
Married | 1,300 | 1,300 | 1,300 |
Other Values | |||
Annual Gift-Tax Exclusion | 15,000 | 15,000 | 15,000 |
Foreign Earned-Income Exclusion | 103,900 | 105,900 | 107,600 |
IRA Contribution Limit | 5,500 | 6,000 | 6,000 |
IRA Contribution Limit (Age 50+) | 6,500 | 7,000 | 7,000 |
401(k) Contribution Limit | 18,500 | 19,000 | * |
401(k) Contribution Limit (Age 50+) | 24,500 | 25,000 | * |
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