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New 2019 standard inflation adjustments

Posted on January 16, 2019

Internal Revenue Service has announced 2019 inflation-adjustmented numbers effective as of January 1, 2019. They include standard mileage rates to calculate deductible costs of operating a vehicle as well as standard and other filing deductions.

The standard mileage rates for the use of a vehicle are:

  • 58 cents per mile driven for business use (up 3.5 cents from 2018)
  • 20 cents per mile driven for medical or moving purposes (up 2 cents from 2018)
  • 14 cents per mile driven in service of charitable organizations (which is set by statute and remains unchanged.)

The CPAs at Teipen Selanders Poynter & Ayres want taxpayers to know that they always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

However, this tax season, under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except for members of the Armed Forces on active duty.

Other inflation-adjusted numbers for tax year 2019

Tax year 2019 adjustments (generally are used on tax returns filed in 2020) 
 include the following dollar amounts:

  • The standard deduction for married filing jointly rises to $24,400 for tax year 2019, up $400 from the prior year.
  • For single taxpayers and married individuals filing separately, the standard deduction rises to $12,200 for 2019, up $200.
  • For heads of households, the standard deduction will be $18,350 for tax year 2019, up $350.
  • Personal exemptions for tax year 2019 remains at 0, as it was for 2018, due to the elimination of the personal exemption in the Tax Cuts and Jobs Act.
  • The top rate is 37 percent for individual single taxpayers with incomes greater than $510,300 ($612,350 for married couples filing jointly). Other rates are:
    • 35 percent, for incomes over $204,100 ($408,200 for married couples filing jointly)
    • 32 percent for incomes over $160,725 ($321,450 for married couples filing jointly)
    • 24 percent for incomes over $84,200 ($168,400 for married couples filing jointly)
    • 22 percent for incomes over $39,475 ($78,950 for married couples filing jointly)
    • 12 percent for incomes over $9,700 ($19,400 for married couples filing jointly), and
    • 10 percent for incomes of single individuals with incomes of $9,700 or less ($19,400 for married couples filing jointly).

For 2019, as in 2018, there is no limitation on itemized deductions.

 

  • The Alternative Minimum Tax exemption amount for tax year 2019 is $71,700 and begins to phase out at $510,300 ($111,700, for married couples filing jointly.) For comparison, the 2018 exemption amount was $70,300 and began to phase out at $500,000 ($109,400 for married couples filing jointly.)
  • The 2019 maximum Earned Income Credit amount is $6,557 for taxpayers filing jointly (who have three or more qualifying children), up from $6,431 in tax year 2018.

 

Other points of interest for calendar year 2019 tax adjustments:

  • The annual exclusion for gifts is $15,000 for calendar year 2019, as it was for calendar year 2018.
  • Monthly limitation for the qualified transportation fringe benefit is $265, as is the monthly limitation for qualified parking, up from $260 for tax year 2018.

 

That is a lot of data to absorb! And, like all data, it is subject to the specifics of your circumstances. It often takes a seasoned CPA to help interpret how these numbers will affect you.

 

If you have questions, we can help you get to the best bottom line possible, using all the guidance apropos of your situation while staying within IRS rules and regulations.