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Filing Deadlines for 2019

The due date for your 2018 1040 tax return is April 15, 2019.  The return can be extended until October 15, 2019, but any amount due must be paid in by April 15th or penalties and interest will be assessed.

Form Changes: The 1040 has been re-designed and is now consists of 2 half pages  and 6 subschedules.  Forms 1040A and 1040 EZ have been eliminated.

Marriage Penalty: The federal marriage penalty has been eliminated through the 32% tax bracket.  That means that the tax rate % threshhold for MJF is double what the Single threshhold is through the 32% tax bracket.

Minnesota has not made any changes to it's tax code for 2018: The MN tax code in place for 2017 is still in effect for 2018.  This means that taxpayers who don't itemize on their federal return, might itemize on their MN return.  So taxpayers should still accumulate thier regular the tax documents, even if they don't think that they'll itemize on their federal return.

Gifting – You can gift up to $15,000 per person and not have to file a gift tax return. This amount is unchanged from the previous year.

Standard Deduction Increase and Exemptions Eliminated:

The standard deduction increased to $24,000 (MFJ), $12,000 (S & MFS), and $18,000 (HOH) for years 2018 thru 2025.

Exemptions have been eliminated for 2018 thru 2025.

State and local sales tax deduction: The state and local sales tax AND property tax deduction is limited to $10,000 beginning in 2018 through 2025.

Miscellaneous Itemized Deductions (2% category) has been eliminated: Unreimbursed job expenses and other expenses in this category are no longer deductible from 2018 thru 2025.  This includes union dues, job search expenses, uniforms/work clothes, job licenses, tools & supplies.

Mortgage Interest: For it to be deductible, mortgage interest is only deductible if it's for the acquisition or improvement of that house.  For new loans you can deduct interest for financing of up to $750,000.

Casualty Loss deduction has been eliminated: Casualty losses are no longer deductible from 2018 thru 2025 unless it is in a federally declared disaster area.


Changes to Tax Credits:

For taxpayers with children: The child tax credit was increased to $2,000. The refundable portion is up to $1,400 for each child. The phase-out for this credit was increased to $400,000 (MFJ) and $200,000 (S, HOH, MFS) of Modified AGI.

Family Tax Credit: For taxpayers with dependents who don't qualify for child tax credit there is a new Family Tax Credit of up to $500.  The phase-out for this credit begins at  $400,000 (MFJ) and $200,000 (for S, HOH, MFS) of Modified AGI.  This credit is not refundable.  The child can be be 19 - 23 years old.

Discharge of Student Loan Debt: This is only nontaxable if it is due to death or disability.  Otherwise this is taxable income.

Education: Higher tuition tax credit: The enhanced American Opportunity Tax Credit of $2,500 is in place for qualified education expenses.

Deduction for tuition and fees: This deduction has expired for 2018.

Deduction for teachers: The Teachers Classroom Expense Deduction of $250 allows teachers to deduct supplies they bought for their classrooms. 


Businesses:

New Pass-Through Deduction for Business Owners: Owners/Partners of an 1120S, Partnership, or Sole Proprietorship may qualify for a deduction of up to 20% of business income on their 1040 tax return.

Depreciation: The Section 179 limit increased to $1,000,00 for 2018. And 100%  bonus depreciation applies to property placed in service through 2022. The bonus % will decline each subsequent year.

Meals & Entertainment Deduction:  Beginning 2018, entertainment is no longer deductible.  Meals are deductible only if there is a business purpose, and only at 50%.  The 100% deduction for certain meals was eliminated.

C-Corp: Effective 2018, the tax rate now 21%.

Please note: This is only a short list of some of the new tax rules. Please spend time with your tax preparer and learn the rules at IRS.gov so you and your advisor are knowledgeable about qualifying expenses, eligible purchases, contributions, gifts, etc., that may help to reduce your tax burden.

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