Updates to the tax season aren’t as major as last year’s. But some may help you pocket a little extra money.

6 minute read

It’s tax filing season again – and we’re still feeling effects from the Tax Cuts and Jobs Act, more than two years after it was signed into law.

In 2017, President Trump inked the “first overhaul of the tax code in more than three decades,” CNBC reported last month. [1] And it caused minor chaos last year. March 2019, the Atlantic reported the headline “Taxpayers Are Very Confused.” [2]

At publication time, the magazine reported fewer tax returns were filed compared to historical evidence. On top of that, traffic to the IRS website had spiked – and a significant number of Americans were “complaining” about the new tax code over social media and in interviews with journalists, according to the Atlantic.

That doesn’t mean this tax season has to be confusing. Debt.com broke down the six biggest ways filing a tax return will be different this year – and how it will affect you…

1. Income brackets

Depending on how much you earn (tax bracket) is the percentage of earnings you’re taxed on (tax rate).
The new law keeps the same seven tax brackets, but at reduced rates. This tax season, the rates will remain the same. However, to keep up with inflation, the IRS has increased income brackets for 2019 tax returns.

The following table shows what’s new…

Tax RatesSingleMarried, Filing JointlyMarried, Filing SeparatelyHead of Household
10%$0 – $9,700$0 – $19,400$0 – $9,700$0 – $13,850
12%$9,701 – $39,475$19,401 – $78,950$9,701 – $39,475$13,851 – $52,850
22%$39,476 – $84,200$78,951 – $168,400$39,476 – $84,200$52,851 – $84,200
24%$84,201 – $160,725$168,401 – $321,450$84,201 – $160,725$84,201 – $160,700
32%$160,726 – $204,100$321,451 – $408,200$160,726 – $204,100$160,701 – $204,100
35%$204,101 – $510,300$408,201 – $612,350$204,101 – $306,175$204,101 – $510,300
37%$510,301+$612,351+$306,176+$510,301+

Source:IRS.gov*

2. Standard deductions

Standard deductions almost doubled two years ago, due to the tax reform law. And this year, they’re increasing by a few hundred dollars for each bracket.

The amount married filers could deduct went up from $13,000 to $24,000 – and single filers deducted $12,000 – instead of $6,500, according to CNBC. [3] Heads of household deductions went up to $18,000 from $9,550.

The following table shows the slight increase for the 2020 tax filing season…

Filing Status20182019
Single$12,000$12,200
Married Filing Jointly$24,000$24,400
Married Filing Separately$12,000$12,200
Head of Household$18,000$18,350

3. Health insurance penalty

The Affordable Care Act may still be around, but the penalty is gone this year. The shared responsibility payment is one facet of the Tax Cuts and Jobs Act of 2017 that are now taking effect.

The individual mandate penalty – the fee uninsured tax filers had to pay – has been done away with. Last year, the penalty was $695. Those who went without health insurance last year won’t be responsible for the penalty.

4. Alimony deduction

Alimony payments will no longer be deductible, according to the IRS. [4] If you got divorced or legally separated last year, you won’t be able to write off your alimony payments. Those planning to claim alimony as income will no longer be able to, either.

5. Retirement account contributions

This year, you’ll be able to deduct more from traditional retirement accounts. Contribution limits to two of the most common retirement accounts have increased by $500.

Those with a traditional 401(k) can contribute $19,000 (up from $18,500 in 2018). And if you have a traditional Independent Retirement Account (IRA) base contributions are $6,000 (up from $5,500 in 2018).

Back in November, the IRS announced that 401(k) contribution limits will increase another $500 next year. [5] Catchup contributions for taxpayers – age 50 and older – have not changed.

6. Health Savings Account contribution limits

Contribution limits to Health Savings Accounts has increased – but really not by much.

HSA contributions for self-only coverage is now $3,500, up from $3,450 last year. Family coverage contributions have changed from $6,900 to $7,000. [6]

These savings accounts aren’t ideal for your everyday consumer. But it’s a great way to save money tax-free for medical expenses for those who qualify for one.

You need to have a high deductible health insurance plan to even be eligible for an HSA. Saving money with an HSA can lower your tax burden. If you earn $60,000 per year and set aside $3,000 in an HSA – you’re only taxed on $57,000.

Previous changes from Tax Cuts and Jobs Act

Just because they’re not the most current changes to the way we file taxes, doesn’t mean we should forget about how the prior ones will affect us. The following are a few of the major changes to the tax code from last year…

1. Withholding

If you work for a company, it’s likely it withholds income tax from your paycheck to pay out to the IRS in your name.

The Treasury Department made changes so that employers withhold a smaller amount of workers’ pay than previous years. The effect led to a small increase in their check every pay period – something the White House touted would give the average family “a $4,000 raise.” [7]

Taxpayers weren’t completely in the dark about, however, they may not have been paying attention. Last July, the General Accounting Office released a report warning taxpayers to adjust their withholdings at work or they may owe the IRS. [8]

It is still too early to determine how many Americans will owe this season. However, the G.O.A. does predict it will be more than 20 percent – roughly 30 million taxpayers. That’s an increase of 3 million who owe the IRS from 2017.

2. Exemptions and penalties

The act eliminates personal exemptions. In 2017, families could subtract $4,050 for each person they claimed, according to the IRS. [9] So families will be paying higher taxes this year.

Still, another change reduces the dollar amount on the taxes you owe: the Child Tax Credit increased. The credit is now $2,000 per child under 17, and $1,400 of that can be refunded, the act reports. [10] If your kid isn’t under 17 and is still a dependent, you can get a $500 nonrefundable credit.

Before the Tax Act, filers who didn’t have health insurance had to pay a penalty of 2.5 percent of their income. The act eliminates that penalty.

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Tips for filing taxes

If you dread filing your taxes, you’re not alone. In fact, 52 percent of Americans get stressed out around tax filing season, according to a 2018 TaxSlayer survey. [11] For detailed instructions, check out Debt.com’s how-to guide for filing your taxes.

But while you’re here, below are a few quick tips to reduce the pressure.

How to do your taxes for free

If you make $54,000 or less per year, have a disability, or speak limited English, you might qualify for free tax preparation through an IRS program called Volunteer Income Tax Assistance. [12] The only catch is you have to go in person, but you can search for an IRS-certified tax helper by zip code right here.

If your household income is below $66,000, you have the Free File option. [13] That means you can use name-brand tax software to file your taxes online for free. More than a dozen companies, including TurboTax, participate in Free File, although income and state restrictions vary. So, make sure to check that you meet the eligibility requirements for the free version or you could end up getting charged before you can finish filing.

If you’re over 60, you can get some free tax help from another IRS program called Tax Counseling for the Elderly. [14] Through TCE, organizations like AARP offer tax preparation and help with confusing tax questions. [15]

How do I know if I owe the IRS money?

Head over to the IRS withholding calculator to project exactly what you’ll owe during tax season 2019.

You’ll need the most recent paycheck stub for everyone on your return, and the tax return you completed the year prior to guiding you in estimating your deductions and credits. The final result even instructs you about how to fill out your Form W-4 for withholding. [16]

Take that to your human resources department or fill out the form on your company payroll site, and you can avoid owing a big tax bill next year.

How to get a tax extension

If you need more time to file your taxes, you can get a six-month extension to file your taxes.

It doesn’t get you off the hook for unpaid taxes, though. So if you owe Uncle Sam, you should pay what you can before Tax Day. (If you overpay, you’ll be able to mention that when you do file the paperwork, and you’ll get a refund.)

If you haven’t paid in full by the April 15 deadline, you’ll be hit with interest charges on the unpaid amount.

By this point, you know what you’re up against with tax season 2019. If your curious when you’ll get your money, check out Debt.com’s in-depth report Where’s My Tax Refund?

Cameren Boatner contributed to this report.

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About the Author

Joe Pye

Joe Pye

Joe Pye began writing about debt and personal finance more than three years ago while attending Florida Atlantic Univerisity, where he served as Editor-in-Chief of the student-run newspaper, the University Press. Before graduating with a bachelor's degree in multimedia journalism, Pye placed as a finalist for the Mark of Excellence award by the Society of Professional Journalists Region 3 for feature writing and in-depth reporting. Since taking a full-time position as associate editor at Debt.com in 2018, Pye has become a certified debt management professional who's applied what he's learned to his personal life by paying down more than $22,000 worth of combined credit card, student loan, auto and tax debt in less than two years. He maintains a frugal and debt-free lifestyle. Pye's goal is to uncover trends in the financial world and share his experiences to help readers stay out of debt.

Published by Debt.com, LLC