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Important Tax Changes for Individuals in 2019

Date: 1/2/2020

The Affordable Care Act’s Individual Tax Penalty is History

During 2014 through 2018, the Affordable Care Act (“ACA”; also called Obamacare) required all individuals to obtain minimally adequate health insurance coverage for themselves and their families each year. Those who failed to do so were required to pay a tax penalty—officially called the “shared responsibility payment”—to the IRS. For most people, the penalty was $695 per person ($347.50 per child). However, many people were exempt from the penalty due to their low income or other reasons. Congress eliminated the tax penalty completely starting in 2019.

Thus, you will not be charged an IRS penalty if you do not obtain health insurance for yourself and your family for 2019 and later.

If you're an employee or employer, be aware that the ACA’s employer mandate remains in place in 2019 and later. This requires that employers with more than 50 full-time equivalent employees provide their employees with health insurance coverage meeting the ACA’s requirements or pay substantial penalties.

It’s Easier to Take Money Out of Your 401(k) Due to Hardships

If you have a 401(k) account, you are not eligible to take the money out until you reach age 59 ½ without incurring a penalty. Early withdrawals are subject to a 10% penalty tax as well as regular income taxes. However, early withdrawals without penalty are permitted in the case of hardship. Such hardships include medical expenses, preventing eviction or foreclosure, tuition for higher education expenses, purchasing a home, paying the funeral expenses for a family member, or losses due to federally declared disasters.

Starting in 2019, the IRS liberalized its rules for taking hardship distributions. In the past, you were required to first attempt to borrow the money you needed from your 401(k) account, instead of taking a withdrawal. This is no longer required. Additionally, under former rules, you were not permitted to make any new contributions to your 401(k) for six months after you took a hardship distribution. This rule has been eliminated starting in 2019.

Big Change in Tax Rules for Alimony

For decades, alimony payments were deductible by the ex-spouse who made them and taxable income for the receiving ex-spouse. The alimony deduction saved on taxes because the alimony-paying ex-spouse was usually in a higher tax bracket than the alimony-receiving ex-spouse.

The deduction for alimony payments was permanently eliminated starting in 2019. Moreover, alimony recipients are no longer required to pay tax on their alimony payments or include them in income. This change applies to all divorces or legal separations finalized January 1, 2019 or later. The old rules continue to apply to divorces finalized before January 1, 2019. The new rules will result in many alimony-paying ex-spouses owing more in income taxes.

2020
Jul-23-20205 Reasons Borrowers Shouldn’t Rush Their PPP Forgiveness ApplicationsJul-14-2020COVID-19 & The Effect on UnemploymentMar-30-2020COVID-19 Virus Policy UpdateMar-26-2020Stimulus Package / Personal Care Act of 2020Feb-06-2020Changes to 1099's for the 2020 tax yearJan-22-2020Michigan Unemployment NewsJan-21-20202019 Tax GuidesJan-02-20202019 Tax InformationJan-02-2020Important Tax Changes for Individuals in 2019
2019
Dec-09-2019IRS Installment AgreementsNov-08-2019Innocent Spouse ReliefOct-04-2019Small Business Start-Up and Entity Selection/RestructuringSep-11-2019Tax Planning for FranchisesJul-16-2019 Tips for Finding the Right Accountant for Your Taxes
2018
Oct-30-2018The Tax Cuts and Jobs Act of 2017Sep-26-2018What Business Owners Should Know About the Tax Cut and Jobs Act (TCJA)Sep-07-2018Are You Planning to Use Your Tax Refund to Cover Holiday Expenses?Jul-24-2018Heemer, Klein & Company, PLLC Protects Client Data Against Cyberattacks Jun-01-2018Why Most Small Business Owners Should Convert their LLCs and C Corps to S CorporationsMay-18-2018How to Start Tax Preparation for 2019 Right NowJan-08-2018Tax Cuts and Jobs Act
2017
Oct-17-2017Small Business Health Care NewsJan-14-20172017 Standard Mileage Rates
2015
Dec-21-20152015 Tax Extenders (PATH Act) UpdateOct-27-2015Affordable Care Act (Obamacare)Sep-09-2015IRS News and InformationJul-09-2015"Solo"401K" Retirement planMay-26-2015Deducting Losses from a DisasterApr-03-2015Avoid Late Filing PenaltyMar-23-2015Reporting Foreign IncomeMar-19-2015Home Office Tax DeductionMar-06-2015Education Tax CreditsMar-02-2015Small Business Health Care Tax CreditFeb-27-2015Early Retirement DistributionsFeb-26-2015Net Investment Income TaxFeb-24-2015Capital Gains and LossesFeb-09-2015Missing W-2 / Prior year Tax Return CopiesJan-12-20152014 Comprehensive Tax Year In Review
2014
Dec-31-2014Tax Updates 2014May-23-2014Year End Tax Planning -- AMTMay-01-2014Standard Mileage RatesJan-03-2014The 2013 New 3.8% Net Investment Income Tax & Business Tax Breaks
Past
Dec-13-2013The Affordable Care ActJun-01-2013Higher Education Costs Continue to EscalateMay-01-2013Tax Breaks for Families and StudentsApr-01-2013Residency Issues for RetireesMar-01-2013American Taxpayer Relief Act of 2012Jan-01-2013Filing Status Implications