2019 Year-End Tax Planning Considerations

There were no new major tax laws enacted during 2019 that would have an effect on individual taxpayers. Although 2017’s Tax Cut and Job Act (TCJA) did eliminate many of the deductions that taxpayers relied on in prior years, there are still issues that should be considered during year-end tax planning.

Deductions

The standard deduction for a couple filing a joint return is $24,400 in 2019; $12,200 for single filers. The following deductions are still allowed:

Medical expenses - Expenses in excess of 10 percent of adjusted gross income are deductible on Schedule A, but this floor, when coupled with the $24,400 standard deduction, prevents most taxpayers from realizing any benefit from this deduction. One exception in this area would be for expenses related to nursing home care, which are deductible under certain circumstances. If you pay such expenses, it makes sense to request a statement of the annual costs incurred from your provider so you can discuss the deductibility of these expenses with us.

Local taxes - The TCJA limited the amount of deductible local taxes (real estate, state income, local, etc.) to $10,000. If you are a homeowner, and live in a state with an income tax, there’s a fair chance that you will be limited by the cap. If that is the case, there’s no need to accelerate real estate taxes or fourth quarter state estimated tax payments as you may have done in prior years.