The maximum contribution amount for tax year 2019 is $6,000. The catch-up contribution increases to $1,000. Therefore, taxpayers age 50 and older can contribute up to $7,000 (from $6,500).
The maximum deferral to 401(k) plans, 403(b) annuities, 457 deferrals, and salary reduction SEPs increases to $19,000 (from $18,500). The maximum contribution to a SIMPLE plan increases to $13,000 (from 12,500). 2019 catch up contributions for taxpayers 50 and over is $25,000.
IRA Deduction Phaseout
If a taxpayer is covered by a retirement plan at work, their IRA deductions may be limited if the AGI on Form 1040 is:
|If your Filing Status Is…||And Your Modified AGI Is…||Then You Can Take…|
|single or head of household||$64,000 to $74,000||A full deduction up to the amount of your contribution limit.|
|more than $65,000 but less than $74,000||A partial deduction.|
|$74,000 or more||No deduction.|
|married filing jointly or qualifying widow(er)||$103,000 to $123,000||A full deduction up to the amount of your contribution limit.|
|more than $103,000 but less than $123,000||A partial deduction.|
|$123,000 or more.||No deduction.|
|married filing seperately||less than $10,000||A partial deduction.|
If the taxpayer’s investment income is over $3,600 (from $3,500), the taxpayer is not eligible for the Earned Income Credit (this includes Interest, Dividends, Stocks & Real Estate Income).
The maximum Hope Credit remains $2,500 per eligible student. The maximum Lifetime Learning Credit remains $2,000 per tax return. The phase-out range for the Lifetime Learning Credits is $116,000 – $136,000 if married filing jointly and $58,000 – $68,000 for all other filing statuses. The phase-out range for the Hope credit is $160,000 – $180,000 (MFJ) and $80,000 – $90,000 for all other filing statuses. If your AGI is over $90,000 ($180,000 for joint filers), you cannot claim the credit.
Qualified Adoption Expenses
The maximum adoption credit is $14,080 (from $13,810). The credit is phased out for taxpayers with modified adjusted gross income (MAGI) beginning at $211,160, and is completely phased out at MAGI of $251,160. The credit is NOT refundable. The credit for a special needs child is allowed for the year in which the adoption becomes final. No credit for a special needs child is allowed until the adoption becomes final.
Social Security and Medicare Wage base
Only the social security tax has a wage base limit. The wage base limit is the maximum wage that is subject to the tax for that year. For earnings in 2019, this base is $132,900 (from $128,700). There is no wage base limit for Medicare tax. All covered wages are subject to Medicare tax.
Child Tax Credit
2019 Tax Year Child Tax Credit is $2000.00 per child under age 17 and $500.00 for qualifying dependent (www.irs.gov). Refundable to extent 10% of taxpayer’s earned income in excess of $1,400 up to the per child credit amount, if total tax liability, minus nonrefundable credits taken.
New Standard Deduction
|Head of Household||$18,350||$18,000||$9,350||$9,350|
|Married Filing Joint||$24,400||$24,000||$12,700||$12,600|
|Widow w/ Dependent||$24,400||$24,000||$12,700||$12,600|
|Married Filing Separate||$12,200||$12,000||$6,350||$6,300|
New exemption amount
|Year||Business||Mail Carrier||Charity & Volunteer||Medical & Moving|
|2011 (1/1 – 6/30)||0.51||0.4725||0.14||19.0|
|2011 (7/1 – 12/31)||0.555||0.4725||0.14||23.5|
Transportation Industry/Truck Drivers M & E – $66 inside the continental U.S., $71 outside the continental U.S. If subject to the Department of Transportation (DOT) Hours Of Service rule, 80% of the amount spent for meals is deductible, rather than the 50% for other taxpayers.
Foreign Earned Income Inclusion
If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation ($100,800 for 2015, $101,300 for 2016, $102,100 for 2017, $104,100 for 2018, and $105,900 for 2019). In addition, you can exclude or deduct certain foreign housing amounts.
Certain itemized deductions are limited for taxpayers with AGI of $313,800 (MFJ), $287,650 (HOH), $156,900 (MFS), and $261,500 (S) for year 2017. Medical expenses, investment interest, and casualty and theft losses are not phased out. Beginning with tax year 2018, there is no longer a limitation on itemized deductions for higher income tax payers.
Student Loan Interest
The maximum deduction for interest paid on qualified student loans is $2,500 and begins to phase out at MAGI of $70,000 to $85,000 (S, HOH, QW) and $140,000 to $170,000 (MFJ). MFS No exclusion.