BUFFALO, N.Y. (WKBW) — As 2019 winds down, there are some new tax law changes that will affect many taxpayers when they prepare their returns and plan tax strategy starting in January 2020.
The changes occured when President Trump signed into law the "Further Consolidated Appropriations Act, 2020" to prevent a government shutdown. Besides keeping the government open, it also included many tax provisions that will impact the 2019 and 2020 tax year for numerous individuals, explained Tim Eliason at EG Tax in Tonawanada.
Among the changes:
- Reinstatement for the deduction of mortgage insurance premiums on itemized deductions through 2020.
- Reinstatement of the tuition and fees deduction through 2020.
- The medical expenses deduction on itemized deductions returns to 7.5% from 10% for 2019 and 2020.
- Required Minimum Distribution (RMD) for IRA (Individual Retirement Accounts) age is increased from 70 ½ to 72 years of age.
- Removes the age limitation on contributions to traditional IRAs.
- Starting in 2020, new parents can take a penalty-free distribution from 401(k) or IRA within a year after a birth or adoption. The act also benefits those who suffer.
- The 2.3% excise tax for individuals on medical devices will be repealed starting on January 1st, 2020
The act also benefits those who suffer losses in a Federally qualified disaster area to take money from tax favored retirement plans to help pay for recovery costs without early withdraw penalties. This would include Western New York victims of the recent windstorm damage, explained Eliason.