During 2019 no tax bill was enacted. The Tax Cut and Jobs Act (TCJA) was enacted in 2018. Certain provision of the TCJA did not take effect until January 1, 2019. The tax extenders that expired at the end of 2017 have not been reinstated.
Alimony
The major change is the treatment of alimony. Under pre -2019 law alimony paid was a deduction and alimony received was taxable to the recipient. This is no longer the law. For divorces and legal separations that are executed after 2018, alimony is no longer deductible to the payor and no longer taxable to the recipient.
It's important to emphasize that the current rules continue to apply to already-existing divorces and separations, as well as divorces and separations that were executed before 2019.
Some taxpayers may want the TCJA rules to apply to their existing divorce or separation. Under a special rule, if taxpayers have an existing (pre-2019) divorce or separation decree, and they have that agreement legally modified, then the new rules don't apply to that modified decree, unless the modification expressly provides that the TCJA rules are to apply. There may be situations where applying the TCJA rules voluntarily is beneficial for the taxpayers, such as a change in the income levels of the alimony payer or the alimony recipient.
Health Insurance Mandate
The insurance mandate penalty has been suspended. Therefore if you have no health insurance there is no penalty.
Casualty Losses
Only taxpayers in a federally declared disaster area are allowed to claim a casualty deduction.
Year- End Tax Planning for Individuals
As an effect of the TCJA many taxpayer’s are unable to itemize deductions. Some taxpayers may be able to work around these deduction restrictions by applying a “bunching strategy” to pull or push discretionary medical expenses and charitable contributions into the year where they will have a tax effect.
If receiving a required distribution from an IRA consider making charitable donations directly from the IRA to the charity. By doing this, the charitable contribution will reduce the taxable distribution so even if you cannot itemize deductions, your charitable contribution is tax deductible.
Consider paying medical or charitable contributions by credit card. As long as charged before December 31st, will be deductible in 2019.
Income Surcharge – If married filing joint earned income exceeds $ 250,000 or single taxpayer exceeds $200,000, try to defer year-end bonus until 2020 so as not to be liable for the .9% surcharge.
High income taxpayers should be aware of the 3.8% surtax and try to minimize unearned income.
If you have short term capital gains, consider selling stocks which have a loss to minimize taxes.
If you believe a Roth IRA is better than a traditional IRA, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA in 2019 if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2019, and possibly reduce tax breaks geared to AGI (or modified AGI. By doing this, any appreciation will be tax free as the assets are in a Roth IRA.
To reduce 2019 taxable income, consider deferring a debt-cancellation event until 2020.
To reduce 2019 taxable income, consider disposing of a passive activity in 2019 if doing so will allow you to deduct suspended passive activity losses.
Businesses can claim a 100% bonus first year depreciation deduction for machinery and equipment—bought used (with some exceptions) or new—if purchased and placed in service this year. The 100% write-off is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the 100% bonus first-year write-off is available even if qualifying assets are in service for only a few days in 2019.
In 2019, a taxpayer can make personal gifts up to $15,000 a year per recipient without gift tax consequences,: This equates to $30,000 per year for a married couple. The lifetime exclusion amount for gifts is $11,400,000 for 2019.