Tax
season begins this year on Monday, January 27, 2020. This is the first day that
the IRS will start accepting and processing 2019 tax year forms. The Military
Families Learning Network personal finance team recently held a webinar
called Tax Updates: New Year, New Forms, New Thresholds. Below are some
key highlights:
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In 2019,
the penalty for lacking health insurance is $0. There are no longer any shared
responsibility payments.
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Itemizing
tax deductions is much rarer today (about 10% of taxpayers) than it was before
the Tax Cuts and Jobs Act (TCJA) passed. Miscellaneous deductions are gone and
state and local taxes, combined, are capped at $10,000. Most remaining tax itemizers
have high mortgage interest payments and/or charitable donations.
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The TCJA
doubled the child tax credit to $2,000. Eligibility rules are the same this tax
season with one major addition. The children for which the credit is taken must have a Social Security number. The child tax credit cannot
be claimed anymore with an ITIN (individual taxpayer identification number).
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The 1040
tax form looks different…again. It is longer than last year (no longer postcard
size) and has three supplemental schedules instead of six. There is also a new
1040-SR form for taxpayers age 65 and older.
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The
chained CPI (Consumer Price Index) in effect as a result of the TCJA has resulted
in smaller inflation adjustments for tax-related items. While the changes are
subtle on an annual basis, they will add up over time.
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