There is no income limit if you and your spouse don’t have access to a work-based plan. If you have access to an employer-sponsored retirement plan, your income has to fall below $63,000 ($101,000 if you’re married and filing jointly). Whether you itemize or not, the money you kick into a 401(k) is tax-deductible-as are contributions to a traditional individual retirement account (IRA), assuming you meet certain requirements. The following deductions are worth your attention when filing your 2019 tax returns. The Tax Cuts and Jobs Act, which went into effect in 2018, resulted in some pretty big changes. What deductions can I take for the 2019 tax year? As we’ll break down in the next section, some deductions are only available if you choose to itemize. Saving money is the name of the game, so going this route makes sense if listing out your deductions will add up to more than the standard deduction. Choosing to take the standard deduction means you can’t also list out additional deductions to bring down your taxable income even more (also known as itemizing). For the 2019 tax year, it sits at $12,200 for individuals and $24,400 for married couples filing jointly. This is an amount that anyone can claim in order to reduce their taxable income. (You can’t do both.) Claim the standard deduction When filing your taxes, you can tackle your deductions in one of two ways. The tax code has a boatload of deductions for which you may be eligible, if you know where to look. If, for instance, you qualify for a $500 tax credit, your tax bill will drop by $500. ![]() Tax credits work a little differently, shaving an actual dollar amount off your final tax bill. This ends up bringing down your tax liability (a.k.a. (More on this in a moment.)Ī tax deduction is an expense you can write off to reduce how much of your income is subject to taxes. Only 14 percent of those surveyed by GOBankingRates in 2019 knew how much the standard deduction is worth. While deductions are perfectly legal strategies for saving money on your taxes, many Americans are in the dark as to how they work. Here’s what you can expect when filing your 2019 return. The IRS is on track to process refunds within 21 days for folks who e-file with direct deposit. If you’re expecting a tax refund for 2019, the coronavirus shouldn’t slow down the process. Self-employed workers also have this extra time before their first 2020 estimated quarterly tax payment comes due. That gives taxpayers three extra months to file their returns and pay their tax bill (if they have one) without interest or penalties. Now for some good news-you have a little more time to get your financial ducks in a row since the tax deadline has officially been extended to July 15 due to the COVID-19 crisis. This may have a direct impact on the tax deductions you’re able to take. Some rules have carried over into the 2019 tax year-other things have been tweaked or eliminated altogether. ![]() You might have noticed some pretty big changes when filing your 2018 tax return last year, thanks to sweeping tax reform legislation.
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