Changes To The 2019 Federal Tax Return
There were major changes to the format of the 2018 Federal individual tax return forms, but nothing quite so drastic for 2019. However, there are a few changes that you should be aware of:
If you engaged in a transaction involving virtual currency (i.e. Bitcoin, Ether, etc.) you are required to file Schedule 1, Additional Income and Adjustments To Income, and check the "Yes" question box. A transaction involving virtual currency includes the receipt or transfer of it for free, exchanging it for goods or services, selling it, or exchanging one type for another. These transactions could also result in taxable income, so you should discuss any virtual currency transactions with your tax preparer. Anyone who files Schedule 1 for other purposes is required to state whether or not they engaged in virtual currency transactions during 2019.
If you received or paid alimony pursuant to an agreement entered into before 2019, you are required to enter the month and year of your original divorce or separation agreement.
There is a new tax form for seniors, Form 1040-SR. You can use this form if you were born before January 2, 1955. In general, Form 1040-SR is the same as Form 1040, but has larger print. You will not reduce your taxes by using this form, it is just easier to read.
IRA and pension income is no longer reported together on the same line. IRA distributions are reported on lines 4a and 4b. Pensions and annuities are reported on lines 4c and 4d.
The simplified worksheet for calculating the qualified business income deduction has been replaced with Form 8995, which must be filed with your tax return. If you don't qualify to use Form 8995, you must complete the longer Form 8995-A and possibly additional schedules A, B, C or D.
In the signature section of your return there are boxes where you can enter your telephone number and email address. These are optional and we discourage you from providing this information. The IRS will send a notice through the mail if there is an issue with your return. An initial contact from the "IRS" by telephone or email is most likely an attempt to scam you and should be ignored. You should contact your tax return preparer any time you receive a written communication from the taxing authorities.
Connecticut Income Tax Changes
For 2019, taxpayers are allowed to subtract 14% of any
pension or annuity income received from their income if:
they are single, married filing separately or head of household and their federal adjusted gross income (AGI) is less than $75,000 or
they are married filing jointly and their federal AGI is less than $100,000
This deduction does not apply to distributions from IRA, SEP, or SIMPLE plans.
For 2019, taxpayers are allowed to subtract 100% of their Social Security benefits included in Federal AGI if:
they are single or married filing separately and their federal adjusted gross income (AGI) is less than $75,000 or
they are married filing jointly or head of household and their federal AGI is less than $100,000
For 2019, the modification for income received from the Teachers' Retirement System was scheduled to increase from 25% to 50%, but legislation has postponed this increase until 2021.
The Connecticut Pass-Through Entity Tax Credit has been decreased from 93.01% to 87.50% for 2019.
A word of caution: this is a very brief summary and does not include all of the details that may impact your individual situation. Please contact us if you would like more information.
About Lewitz, Balosie, Wollack,
Rayner & Giroux, LLC
We provide accounting, tax, and financial services to individuals, businesses, nonprofit organizations, estates, and trusts. Our services include tax return preparation, software consulting, and compilations, reviews, and audits of financial statements. We have been located in the shoreline community of Old Saybrook, Connecticut for over 60 years. Feel free to contact us if we can be of service. We can be reached at 860-388-4451. Our website is www.saybrookcpas.com
IRS Circular 230 Disclosure
Tax advice contained in this communication, unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.