As the shutdown continues, we would like to urge you to continue to monitor your own tax situation and how it relates to your financials, being prepared for when the shutdown ends as well as continuing to look toward your future.
One item that is important each year is to evaluate your wages and withholdings. Employers should be asking you for an updated W-4 (withholding election).Because of the tax law changes that will be in effect for 2018 as well as 2019, it will be important to for you to ensure that your withholding is sufficient.The IRS provides a useful calculator for you to complete a ‘paycheck checkup’. A link to the calculator can be found here.
Deductions and Itemizing are giving us some of the biggest changes – limits on mortgage interest, state, and local taxes are significant. However, the standard deduction has been nearly doubled for all filers.Additionally, alimony payments are no longer deductible and moving expenses are deductible for Armed Forces members only.
Retirement contribution maximums have increased for 2019 across the board and are as follows:
IRAs (regular & Roth)
Up to age 50 - $6,000
Age 50+ - $7,000
401(k) and other qualified plans
Up to age 50 - $19,000
Age 50+ - $25,000
Up to age 50 - $13,000
Age 50+ - $16,000
Defined Contribution Plans
Additionally, a change in the inflation adjustment calculations for 2018 reduced the maximum deductible HSA contribution for taxpayers with family coverage under an HDHP by $50, to $6,850.
Lastly, while currently the IRS is stating that tax returns and ‘refunds’ will be out “as scheduled” there is resistance from labor unions as well as from the Office of Management and Budget who could force a delayed payment of refunds.Although there could be a delay, our recommendation is to continue to prepare for your tax filing and file as early as possible because if there is a delay, the earlier you file the less delay you may experience from a backlog created from the shutdown.
As always, if you have questions or would like further information please contact our office.