It’s the most wonderful time of the year. And while, confession time, I have been watching a lot of Hallmark holiday movies, I’m talking today about the overlap of one tax year and the approaching one.
As the annual count of days winds down, we taxpayers must pay attention to ways to cut our current tax year’s bill as well as make some initial plans to keep the Internal Revenue Service out of our pockets in the coming tax year.
One of the major planning tools in this regard are the annual inflation adjustments of tax-affected amounts. Today is our lucky day.
Numbers, we’ve got lots o’ numbers: The IRS has handed us this tax tool via the just-issued 2019 tax year inflation adjustments for more than 60 tax provisions.
A quick note that I want to make clear in your excitement about these new figures: The tax year 2019 adjustments generally are used on tax returns filed in 2020.
So while it’s good for planning purposes to have this information, it won’t help come January 2019 when you file your 2018 tax year return.
My advice, then, is to note this post — and the nine others on this topic that will follow — and perhaps bookmark it. That way, when it comes time next year to make some tax decisions, you can come back and recheck the dollar limits for 2019.
As noted by the IRS, the inflation info in its official Revenue Procedure 2018-57 covers more than 60 tax situations, some of them new or changed under the Tax Cuts and Jobs Act (TCJA).
I know a lot of places dump all the data in one document, essentially a touched-up version of the Revenue Procedure. Me, I like to savor each tax portion. That’s why each year I do a tax inflation adjustment series.
So that it doesn’t stretch out too long, it’s a 10-parter, with one post on key inflation changes for 10 days, including Saturday and Sunday. (You can get an idea of what’s coming by checking last year’s version, which kind of got messed up was annotated thanks to changes in the passed-late-in-the-year tax reform bill.)
The 2019 series kicks off now, with Part 1 focusing on what, to most filers, it the most important change each year — the income tax rates and just how much of our earnings falls into each of these brackets.
2019 still has (for now) 7 tax brackets: The aforementioned TCJA kept the number of tax rates at seven, but lowered most of them.
That’s still the same for 2019, despite some vague promises before the recent midterm elections for another 10 percent middle-class tax cut.
The table below shows what the rates are for 2019 and what income amounts fall into those tax brackets.