Alexander Strauss, financial planning and tax accountant, summarizes what we’ve learned from the 2019 tax return season and outlines possible tax reduction opportunities that you may be able to utilize next year. He also answers recent tax FAQs, including “Am I Eligible to Receive a Stimulus Check?” and “What’s The Deal With the New W-4?”

Another exciting (and challenging) year of tax changes is in the books! From tax code updates to unprecedented pandemic responses, the tax code has kept everyone on their toes.

After preparing several thousand tax returns, we are pleased to summarize what we learned as well as offer opportunities that you may be able to utilize next year.

Taxes Were Extended…Now What?

Sometimes what seems like a simple change can create a domino effect of unintended consequences. When the IRS announced that Federal tax returns are now due on July 15, two questions emerge:

  1. Are state tax returns also due on July 15?
  2. When are federal and state tax estimates due?

Although all states have extended the due date of their tax returns, not all state returns are due on the same date as the federal return. For instance, Idaho taxes are due on June 15, Mississippi taxes are due on May 15, and Virginia taxes are due on May 1. Check with your financial advisor to see when your state tax return(s) are due.

Q1 Federal tax estimates are normally due on April 15, and Q2 estimates are normally due on June 15. This year the IRS changed the due dates for both Q1 and Q2 estimates to July 15. Due dates for state estimates vary. For instance, Illinois Q1 estimates were due on April 15 and Q2 estimates are due on June 15.

Am I Eligible to Receive a Stimulus Check?

The IRS is automatically sending “Economic Impact Payments” to eligible taxpayers. So are you eligible? If you are single with income above $99,000 ($198,000 if filing joint) with no children, then unfortunately you are not eligible. If your adjusted gross income is $75,000 or less ($150,000 if filing jointly) you should receive the maximum $1,200 ($2,400 if filing jointly) payment. The payment amount decreases by $5 for every $100 above the threshold above.

For those who have filed their 2019 tax returns, the IRS will use 2019 AGI to determine eligibility. The IRS will use information from your 2018 tax return if you have not yet filed for 2019. It seems the government is more concerned with funneling money into the economy than with figuring out the nitty gritty of eligibility. For instance, some people have received $1,200 for a spouse who died in 2019. Since the check is technically a 2020 tax credit, that spouse is probably not eligible to receive the money. The IRS has not yet determined what (if anything) will need to be paid back.

Did Anything Change from the Tax Cuts and Jobs Act (TCJA) in 2018?

The tax code is always changing! A few updates include:

  • The nonbusiness energy property credit was extended through 2020 which applies to property placed in service after Dec. 31, 2017. The maximum credit that can be taken is $500 on qualified property (e.g. furnaces, water heaters, central air conditioners, insulation).
  • The medical expense floor deduction decreased to 7.5% for 2019. If you or a family member had a significant amount of medical expenses compared to adjusted gross income, you may be able to increase your itemized deductions.
  • The deductibility of mortgage insurance premiums was extended through 2020 for amounts paid after Dec. 31, 2017 (subject to phase-out).
  • The kiddie tax measures set forth by the TCJA in 2018 have been repealed. Unearned income is no longer required to be taxed at trust/estate rates. It is important to determine if it is more beneficial to tax this income at trust or individual tax rates (the answer depends on your individual situation).

What’s The Deal With the New W-4?

We received a lot of questions from clients asking if they are required to fill out a new W-4 and submit it to their current employer. You do NOT have to resubmit your W-4 if you are happy with your current withholding elections. However, to reduce the complexity of the current withholding system, the IRS unveiled a new W-4 (you can see the new form here: The major change is that allowances are no longer used. If you want to change your withholding, we strongly encourage filling out the new W-4. Please talk to your financial advisor and we would be happy to help you figure out the optimal withholding amounts.

What We Learned

Ultimately, 2019 was a mixture of tax law changes (such as allowing for the nonbusiness energy property tax credit), unprecedented federal and state deadline modifications, and an attempt to simplify withholding. We are pleased with the 2019 tax planning strategies that we implemented for our clients, and they appreciated our real-time updates regarding tax return due-date changes.

If you’d like to take advantage of all the latest tax change legislation, consult with your financial advisor to determine the best way to help build your Ideal Future.

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