Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2019.
The combined annual limit on contributions to traditional and Roth IRAs increased to $6,000 in 2019 (up from $5,500 in 2018), with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is phased out for the following modified adjusted gross income (AGI) ranges:
2018 | 2019 | |
---|---|---|
Single/head of household (HOH) | $63,000 - $73,000 | $64,000 - $74,000 |
Married filing jointly (MFJ) | $101,000 - $121,000 | $103,000 - $123,000 |
Married filing separately (MFS) | $0 - $10,000 | $0 - $10,000 |
Note: The 2019 phaseout range is $193,000 - $203,000 (up from $189,000 - $199,000 in 2018) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.
The modified AGI phaseout ranges for individuals to make contributions to a Roth IRA are:
2018 | 2019 | |
---|---|---|
Single/HOH | $120,000 - $135,000 | $122,000 - $137,000 |
MFJ | $189,000 - $199,000 | $193,000 - $203,000 |
MFS | $0 - $10,000 | $0 - $10,000 |
Under the kiddie tax rules, unearned income above $2,200 in 2019 (up from $2,100 in 2018) is taxed using the trust and estate income tax brackets. The kiddie tax rules apply to: (1) those under age 18, (2) those age 18 whose earned income doesn't exceed one-half of their support, and (3) those ages 19 to 23 who are full-time students and whose earned income doesn't exceed one-half of their support.
2018 | 2019 | |
---|---|---|
Single | $12,000 | $12,200 |
HOH | $18,000 | $18,350 |
MFJ | $24,000 | $24,400 |
MFS | $12,000 | $12,200 |
Note: The additional standard deduction amount for the blind or aged (age 65 or older) in 2019 is $1,650 (up from $1,600 in 2018) for single/HOH or $1,300 (the same as in 2018) for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.
|
||||||||||||||||||||||||||||||||||||||||||||
Posted: to Wealth Management News on Fri, Jan 4, 2019
Updated: Fri, Jan 4, 2019