What’s New?

2019 Income Tax Changes

The Tax Cuts and Jobs Act (TCJA) has not changed from 2018. MN did adopt the federal TCJA with exceptions. Most differences have to do with business depreciation. Dependent children in MN will mean an extra deduction.

A new question for everyone will be asked this year about virtual currency as to whether you have bought, sold, or acquired any in 2019. These are bitcoin, litecoin, ethereum, or z cash. Any sales are subject to tax and must be reported.

Businesses that do internet sales may require sales taxes to be paid in other states because of the Wayfair v South Dakota US Supreme Court decision. If you do your own bookkeeping it is your responsibility to take care of this.

If you are claiming the American Opportunities Credit for college students both the form 1098-T and copies of the tuition and related expenses used to claim the credit will be needed as proof.

New IRS requirement for non- custodial parents claiming a dependent must have a form 8332, signed statement from custodial parent, or copy of legal document showing release of dependency exemption by custodial parent.

There no longer is a penalty for not having health insurance. If you qualified for a subsidy through MN Sure form 1095-A will still be issued and a reconciliation of income to subsidy will be done for payback or extra credit.

For businesses the Section 179 write off for assets in service in 2019 is $1,020.000 maximum and is a permanent part of tax law for future years.Bonus depreciation for new or used assets remains at 100% this year.

New Qualified Business Income (QBI) Income from sole proprietorships, partnerships, and S corporations will mean a 20%deduction based on profit or taxable income whichever is less reducing federal taxable income but will not reduce self-employment tax. The deduction begins phasing out when taxable income is $160,725 single & $321,400 married joint.

No like kind exchange on equipment again this year purchased or traded for business use. The trade value will be considered a sale but the full new purchase price can be depreciated.

The Secure Act was passed near the end of December 2019 some of the highlights are:

  • Removal of IRA deposit age limit, anyone can contribute to an IRA at any age after 12/31/2019 provided you have earned income.
  • Increase in RMD (Required Minimum Distribution) Age for distributions required after 12/31/2019 to 72 years old, previously it was by age 70 ½. Stipends qualify for IRA.
  • Penalty free 401k / IRA distribution for child birth up to $5,000 for birth or adoption cost. It is taxable but no 10% penalty.
  • 529 plans may be used to pay student loans limited to lifetime limit of $10,000. 529 may be used for apprenticeships both are after 12/31/2018.
  • Inherited IRA Distribution limit reduces the allowable distribution period for inherited retirement accounts for individuals dying after 12/31/19 to 10 years. This does not apply to spouse or minor children, disabled or chronically ill beneficiaries.