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IRS Announces 2019 Inflation Adjustments


The IRS has just released the inflation-adjusted amounts to be used for 2019 tax computations, fringe benefits and a host of other items in the tax law.


Examples are:

    • The regular income tax rate brackets will widen by modest amounts – please call for details, if you want them.
    • An increase in the monthly parking or transit pass fringe benefit from $260 in 2018 to $265 for 2019.
    • The maximum Cafeteria Plan (Section 125) funding of $2,700 per year, up from $2,650 annually.
    • The standard deduction will increase to $24,400 on a joint return up from $24,000, while Heads of Households will claim $18,350 vs. $18,000 and singles or married, filing separately filers are allowed $12,200 vs. $12,000.
    • The standard deduction for dependents filing their own returns is the greater of $1,100 or their earned income plus $350.
    • Teacher’s allowance of a deduction for out of pocket school supplies is unchanged at $250.
    • Alternative Minimum Tax exemptions will be increased to $111,700 on joint returns ($55,850 if separate returns are filed), while other individual filers are allowed $71,700 and the Estates and Trusts amount is $25,000.  The phase out income levels will also increase, as will the income level at which the base rate for this tax increases from 26% to 28%.
    • The election to immediately expense property will increase to $1,020,000 from $1,000,000 and will phase out when total acquisitions exceed $2,550,000.
    • The Qualified Business Income deduction of 20% will begin to phase into limitation computations when taxable income exceeds $321,400 on a joint return ($160,700 for others) lifting this threshold from $315,000 in 2018 ($157,500 for others).
    • The amount of premiums paid for Long Term Care insurance that qualifies as a medical deduction increase modestly, as well – again, if you desire the actual amount allowed for your attained age, please call our offices.
    • Contributions to Medical Savings Accounts will increase to $8,550 for family coverage and $4,650 for self-only.
    • The allowable interest deduction for education loan interest is capped at $2,500, while the deduction begins to phase out at income levels of $70,000 for unmarried or $140,000 for joint filers and is lost when income exceeds $85,000 for unmarried or $170,000 for joint filers.
    • The cash method of accounting and exemption from inventory maintenance and special costing rules will continue to be available for businesses with average annual gross receipts over the prior three years that do not exceed $26,000,000.
    • The allowable amount of business losses that joint filers may claim will increase to $510,000 from $500,000, while other filers may claim $255,000, up from $250,000 for 2018.
    • For those on foreign assignment and qualifying to claim the Foreign Earned Income Exclusion, the maximum exclusion increases to $105,900.
    • The lifetime estate property transfer exemption will increase to $11,400,000 per person.
    • The annual gift exclusion will not change from the limitations of $15,000 for 2018.
    • Various penalties imposed for failure to file returns and/or reports, especially partnership and S corporation returns, as well as Forms W-2 and the 1099 series are increased for 2019 filings due in 2020.


Mark H. Misselbeck, C.P.A., M.S.T. is a Tax Principal at Katz, Nannis + Solomon, P.C. If you have any questions or would like to speak with one of our tax professionals, please contact our office at 781-453-8700.

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Waltham, MA 02453
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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