Cassell & Hendricks, CPA, PA

Donna Hendricks, CPA
Branden Daniels, CPA
269 Ann St
Pickens, SC 29671
864-878-7735
Fax: 864-878-0690
info@chcpa.net
chcpa.net

Wealth Update
Your Monthly Guide to Wealth ManagementJanuary 2019

Key Retirement and Tax Numbers for 2019

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.

Employer retirement plans

  • Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $19,000 in compensation in 2019 (up from $18,500 in 2018); employees age 50 and older can defer up to an additional $6,000 in 2019 (the same as in 2018).
  • Employees participating in a SIMPLE retirement plan can defer up to $13,000 in 2019 (up from $12,500 in 2018), and employees age 50 and older can defer up to an additional $3,000 in 2019 (the same as in 2018).

IRAs

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

Estate and gift tax

  • The annual gift tax exclusion for 2019 is $15,000, the same as in 2018.
  • The gift and estate tax basic exclusion amount for 2019 is $11,400,000, up from $11,180,000 in 2018.

Kiddie tax

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.

Standard deduction

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.

Alternative minimum tax (AMT)

2018 2019
Maximum AMT exemption amount
Single/HOH $70,300 $71,700
MFJ $109,400 $111,700
MFS $54,700 $55,850
Exemption phaseout threshold
Single/HOH $500,000 $510,300
MFJ $1,000,000 $1,020,600
MFS $500,000 $510,300
26% rate on AMTI* up to this amount, 28% rate on AMTI above this amount
MFS $95,550 $97,400
All others $191,100 $194,800
*Alternative minimum taxable income

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IMPORTANT DISCLOSURES

Cassell & Hendricks, CPA, PA publishes newsletters and articles as a service to our clients. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Advisor Solutions Copyright 2019.