Tax Law Changes

Leo, in most cases, no.

If Social Security is your only income and you have no other taxable income, you usually do not need to file a federal tax return. Social Security benefits are only taxable if you have other income that pushes you over certain limits.

For a single taxpayer, Social Security becomes taxable only if your total income plus half of your Social Security is over $25,000. If Social Security is truly your only income, you are below that level.

You may still want to file if any of the following apply:

• Federal tax was withheld from your Social Security and you want a refund.
• You received a 1095-A for health insurance through the Marketplace.
• Your state requires a return.
• You had other income not mentioned, such as pensions, interest, or withdrawals from retirement accounts.

If none of those apply, a return is not required.

The standard deduction amounts will increase to $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly and surviving spouses.

For 2019, the additional standard deduction amount for the aged or the blind is $1,300. The additional standard deduction amount increases to $1,650 for unmarried taxpayers.

For 2019, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,100 or the sum of $350 and the individual’s earned income.

The alternative minimum tax (AMT) exemption amounts are adjusted for inflation. Here’s what those numbers look like for 2019:

Individual = $71,700
Married Filing Jointly = $111,700
Married Filg Separately = $55,850
Estates and Trusts = $25000

Pursuant to the Act, for tax years beginning after December 31, 2017 and before January 1, 2026, a deduction will only be allowed for interest on a debt that qualifies as Acquisition Indebtedness. No deduction will be allowed for Home Equity debt.

In addition, the Act reduces the amount of eligible Acquisition Indebtedness borrowing to $750,000 for any debt incurred on or after December 15, 2017.

A taxpayer who entered into a binding contract before December 15, 2017 to close on the purchase of a residence before January 1, 2018, and who actually closes on the acquisition before April 1, 2018, shall be considered to have incurred the Acquisition Indebtedness before December 15, 2017.

ii. The old Acquisition Indebtedness limits continue to apply to taxpayers who refinance existing Acquisition Indebtedness as long as the indebtedness resulting from the refinancing does not exceed the amount of the original debt.

For 2017, the deduction for Qualified Residence Interest was limited to interest paid on up to $1,000,000 of borrowing that qualified as “Acquisition Indebtedness” and up to $100,000 of borrowing that qualifies as “Home Equity Indebtedness”.
Acquisition Indebtedness being defined as debt incurred to acquire, construct or substantially improve a principal residence or a second home, with no restriction on the use of Home Equity Indebtedness.

For contributions made in tax years beginning after December 31, 2017 and before January 1, 2026 the 50% limitation is increased to 60%. Any amounts in excess of the new limit can be carried forward and deducted for up to five years (as was allowed under prior law).

For any contribution made in a tax year beginning after December 31, 2016, the requirement of a charity to provide contemporaneous written acknowledgement as substantiation for any contribution of $250 or more is repealed.

Beginning in 2018, no charitable deduction is allowed for any payment to an institution of higher learning in exchange for which the contributor is given a right to purchase seats at an athletic event.

Prior to the enactment of the new law, charitable contributions were deductible with certain ceilings based upon a percentage of AGI. A 50% of AGI limit applied to cash contributions to public charities and certain private foundations.

For 2019, the tax bracket amounts have been indexed for inflation.

For tax years beginning after December 31, 2017 and before January 1, 2026, seven brackets will apply to individuals: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

No change has been made to the filing statuses that apply to individuals.

For tax years beginning after December 31, 2017 and before January 1, 2026 all miscellaneous itemized deductions that were previously subject to a 2% AGI limitation are suspended.

Among the items included in this elimination are:
All unreimbursed employee business expenses;
Union dues
Brokerage fees
All expenses related to tax return preparation;
Appraisal fees for charitable contributions;
Investment expenses.

Personal casualty losses occurring in a tax year beginning after December 31, 2017 but before January 1, 2026 are not deductible, unless the loss is incurred as a result of a federally-declared disaster.