Eckhoff Accounting News & Resources
While the Tax Cuts and Jobs Act (TCJA) generally reduced individual tax rates for 2018 through 2025, some taxpayers could see their taxes go up due to reductions or eliminations of certain tax breaks — and, in some cases, due to their filing status.
One thing in plentiful supply in today’s business world is help. Orbiting every industry are providers, consultancies and independent contractors offering a wide array of support services. Simply put, it’s never been easier to outsource certain business functions so you can better focus on fulfilling your company’s mission and growing its bottom line.
While most provisions of the Tax Cuts and Jobs Act (TCJA) went into effect in 2018 and either apply through 2025 or are permanent, there are two major changes under the act for 2019. Here’s a closer look.
1. Medical expense deduction threshold
With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever.
The dawning of 2019 means the 2018 income tax filing season will soon be upon us. After year end, it’s generally too late to take action to reduce 2018 taxes. Business owners may, therefore, want to shift their focus to assessing whether they’ll likely owe taxes or get a refund when they file their returns this spring, so they can plan accordingly.
Retirement plan contribution limits are indexed for inflation, and many have gone up for 2019, giving you opportunities to increase your retirement savings:
- + Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans: $19,000 (up from $18,500)
- + Contributions to defined contribution plans: $56,000 (up from $55,000)
- + Contributions to SIMPLEs: $13,000 (up from $12,500)
- + Contributions to IRAs: $6,000 (up from $5,500)
One exception is catch-up contributions for taxpayers age 50 or older, which remain at the same levels as for 2018:
- + Catch-up contributions to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans: $6,000
- + Catch-up contributions to SIMPLEs: $3,000
- + Catch-up contributions to IRAs: $1,000
Keep in mind that additional factors may affect how much you’re allowed to contribute (or how much your employer can contribute on your behalf).