A REVIEW OF 2019 TAX DEDUCTIONS
May 24, 2020 - Douglas Myser
A review of 2019 tax deductions. The Tax Cuts and Jobs Act was the biggest overhaul of the U.S. Tax Code in decades, and it made some significant changes to the tax deductions that are available. Many tax deductions were kept intact, but others were modified, and some were eliminated entirely. Subsequently, legislation with the SECURE Act and Disaster Act reinstated some of the tax benefits on a temporary basis for tax years 2019 and 2020. There are several different types of tax deductions. The standard deduction is one that every American household is entitles to, regardless of their expenses during the year. Taxpayer can claim itemized deductions if it benefits them to do so. Above the line deductions, which are also known as adjustments to income, can be used for households regardless of whether they itemize or not. And finally there are a few other items that do not really fit into one of these categories--but are still tax deductions. A review of 2019 tax deductions
The standard deduction. When filling out their tax returns, American households can choose to itemize certain deductions or they can take the standard deduction--whichever is more beneficial to them. The Tax Cuts and Jobs Act nearly doubled the standard deduction. Before the increase, about 70% of U.S. households used the standard deduction, but now it is estimated that roughly 95% of households will use it. For the 2019 and 2020 tax years, the standard deduction amounts are $24,400 for Married filing jointly for 2019, $18,350 for Head of Household, $12,200 for single, and $12,200 for married filing separately.
The alternative to taking the standard deduction is choosing to itemize deductions. For this to be worthwhile, your itemizable deductions must be greater than the standard deduction to which you are entitled. For the vast majority of taxpayers, itemizing will not be beneficial. Not only did the standard deduction nearly double, but several formerly itemizable tax deductions were eliminated. It is critical the file tax returns correctly or you may end up owing the tax man, and find yourself needing IRS tax resolution.
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