Wells Fargo Tax Center – Laws Affecting Taxes

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What’s New This Year

Every year, laws can change and affect your tax situation. A year after the sweeping changes made by a major tax reform act took effect, new changes are relatively minor. Here are some notable items:

  • Inflation adjustments – Nearly all the figures used to calculate federal income tax are adjusted each year for inflation. For example, for 2019 the IRA contribution limit was increased to $6,000, or for those age 50 or older, $7,000.
  • Medical expense itemized deduction – The floor for claiming this deduction reverts from 7.5% of AGI to 10% of AGI for years after 2018.
  • Alimony – A provision in the tax reform act that changed the treatment of alimony payments had a delayed effective date, applying only to divorce or separation agreements entered into or modified after 2018. For these agreements, alimony payments will no longer be deductible by the payer or included in income of the recipient.

Talk to your tax advisor for more details.

Last updated on December 31, 2019