Once again a timely yet not evergreen article as we close out 2019 and the decades of the 2010’s. There aren’t a lot of changes for 2020 but we still have a few things we’d like to get out to the masses.
Let’s start with personal taxes. Standard deduction has increased to $24,400 for joint fining, $12,200 for single, while the personal exemption has been eliminated. Most filers won’t be able to itemize any longer unless you have a qualified business. Child tax credit has doubled to $2000 per child under age 17. There’s also a temporary credit of $500 per dependent in 2019 called the Family Tax Credit.
Schedule A is for itemized deductions, and there are fewer things that can be deducted this coming year. Mortgage interest is still deductible, but home equity loans aren’t unless used for home improvement. New York state and local income taxes are limited to $10,000, so if you pay more than that you’re not going to be all that happy. Medical expenses are allowed but have a 10% threshold that has to be reached first. You can still claim charitable contributions, so feel free to donate to your favorite charities.
Two quickies for taxes this year. First, there’s no longer a penalty for not having health insurance (though it’s still a smart thing to look into). Second, you’re no longer allowed to deduct either alimony payments or receiving alimony any longer. However, if your divorce was finalized before 12/31/18 you’re grandfathered into your original agreement.
As it regards business, there are fewer protections than their used to be. You can still claim a 50% deduction on meals, but entertainment expenses aren’t allowed any longer.This means taking a client to dinner is fine, but throwing in tickets to the ball game will cost you.
Finally, there’s more onus on tax preparers like us to do more due diligence. This means we have more paperwork and will be asking more questions of our clients. If you used tax preparers that sometimes look the other way… that could get them in trouble down the line.
That’s it for this year; have a great 2020~