The standard deduction 2019 becomes even larger

The lump sum deduction almost doubled in 2018 as part of the law on tax cuts and job creation. For example, the standard deduction for married couples filing a joint return has increased from $ 12,700 in 2017 to $ 24,000 in 2018. Although the personal exemption has been removed, the combination of the higher standard deduction and increased child tax credit has allowed many people to realize substantial savings. American families.

Well, the IRS has just announced its inflation-related adjustments for the 2019 tax year, and the standard deduction increases a bit more. Here is an overview of the new standard deduction for 2019 and what it might mean for you.

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The 2019 standard deduction

I will not keep you in suspense. For 2019, the standard deduction increases as follows:

Data source: IRS.

To be clear, the 2019 standard deduction applies to the income you earn in 2019 and the income tax return you will generate in 2020. The column containing standard deductions for 2018 is what you will use in production your next tax return in 2019.

Will you use the standard deduction in 2019 and beyond?

The short answer is "probably". Since the standard deduction you will use in 2019 when filing your taxes has almost doubled and the new increases are based on this higher amount, the deduction of deductions in detail will no longer be profitable for many households.

In simple terms, it was much easier for many married couples to get detailed deductions of $ 12,700 in their 2017 tax return than for them to submit detailed items of $ 24,000 when filing their return of 2018 revenue next year. This is all the more true as the law on tax cuts and employment has eliminated or reduced several popular inferences that people could detail. Just to name a few:

• Mortgage interest is still deductible, but up to $ 750,000 in principal, unlike the previous $ 1 million cap.
• The deduction for national and local taxes (the SALT deduction) has been the most valuable tax break for Americans in previous years. Starting with your 2018 taxes, the amount is limited to $ 10,000.
• Many different tax deductions have been removed. This includes deductions for most losses related to theft and theft, unreimbursed staff costs, tax preparation fees, and so on.

In recent years, about 70% of US households have used the standard deduction, while the remaining 30% have found it useful to detail. However, after the passage of the Tax Reduction and Job Creation Act, the Joint Committee on Taxation estimated that the proportion using the standard deduction would rise to 94%. In other words, it is not because you have the habit of detailing the deductions that you will always be able to do in the future.

Could the higher deduction save you money?

The increase in the standard deduction in 2019 translates into an increase of just under 2% for each reporting status. Since the reason for the increase is to keep up with inflation, it theoretically should not have much effect on the financial situation of the average American.

Think of it as follows: if your income increases by 2%, your cost of living increases by 2% and the amount of your untaxed income also increases by 2%. So, nothing has really changed in terms of purchasing power or overall financial situation.

If you expect your earnings to remain stable in 2019, the increased standard deduction could allow you to keep a little more of your hard earned money in your pocket and out of the hands of the IRS.

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