Want to know what's in store for 2019 tax returns in the upcoming 2020 filing season? Below is a rundown of the 8 biggest changes that may affect how much you'll owe Uncle Sam on tax day:
Top 2019 Tax Return Changes
1. Tax Rate Changes
There are currently seven federal tax brackets for 2019, ranging from 10% to 37%. While these tax rates themselves haven't changed from 2018, the income amounts in each of the brackets are adjusted each year for inflation. Below is a table listing the tax brackets and rates for the 2019 tax year:
|
Rate |
For Unmarried Individuals, Taxable Income Over | For Married Individuals Filing Joint Returns, Taxable Income Over | For Heads of Households, Taxable Income Over |
|---|---|---|---|
| 10% | $0 | $0 | $0 |
| 12% | $9,700 | $19,400 | $13,850 |
| 22% | $39,475 | $78,950 | $52,850 |
| 24% | $84,200 | $168,400 | $84,200 |
| 32% | $160,725 | $321,450 | $160,700 |
| 35% | $204,100 | $408,200 | $204,100 |
| 37% | $510,300 | $612,350 | $510,300.00 |
2. Increased Standard Deduction
As in previous years, for the 2020 filing season, standard deduction amounts will also increase. The higher deduction limits for 2019 tax returns are as follows:
|
Filing Status |
Standard Deduction Amount |
| Single & Married Filing Separate (MFS) | $12,200 |
| Head of Household | $18,350 |
| Married Filing Joint (MFJ) | $24,400 |
3. New Form 1040-SR Tax Return for Senior Citizens
Included in the passage of the Budget Act of 2018, is a provision that gives senior citizens (those aged 65 and older) their own tax return form, best described as a simplified version of the 1040-EZ. Until now, most seniors had to complete the more complicated form 1040, because they couldn’t meet the income requirements for filing form 1040-EZ. The new 1040-SR form allows senior citizens to claim the standard deduction or itemize their deductions on Schedule A. There are also no income limits or restrictions on the types of income that can be reported
The 1040-SR form is also formatted with seniors in mind. It has larger text and a better color contrast so it is easier on the eyes when reading.
4. Increased 401k and 403(b) Contribution Limits
For 2019 tax returns, the 401K retirement account and 403(b) Tax-Sheltered Annuity contribution limits have been raised to $19,000. Those age 50 or older can contribute an additional $6,000 "catch-up" contribution. These higher limits mean a corresponding decrease in taxable income.
5. Increased IRA Contribution Limits
IRA contribution limits have also increased to $6,000. Those age 50 or older can contribute an additional $1,000 catch-up contribution.
6. Increased AMT Exemptions
The Alternative Minimum Tax ensures that certain wealthy taxpayers, estates, and trusts are paying no less than a minimum amount of tax on their income. The AMT estimates income tax after adding certain tax preference items back into adjusted gross income. The Alternative Minimum Tax (AMT) exemption amounts have been increased for inflation for 2019. The new amounts for the 2020 filing season are as follows:
|
Filing Status |
Exemption Amount |
|
Single |
$71,700 |
|
Married Filing Joint (MFJ) |
$111,700 |
|
Married Filing Separate (MFS) |
$55,850 |
|
Trusts & Estates |
$25,000 |
7. Increased HSA Contribution Limits
Tax payers with a Health Savings Account (HSA), can now increase contributions to their health care savings so they can accrue interest tax free. In 2019 tax returns, the individual limit has been raised to $3,500, while the family accounts now have a limit of $7,000.
8. New Supplemental Schedules from Six to Three
In 2018, the IRS created six new supplemental schedules that would be used together with form 1040. For 2019 tax returns, those schedules have been redesigned and combined into three larger schedules-- he goal being to streamline the filing process. Drafts of these redesigned schedules can be viewed on the IRS website: