Page 12 - Supplement to Income Tax 2019

Estimating Your 2019 Taxes

Estimating Your 2019 Taxes

In estimating your 2019 tax liability, take into account For both traditional and Roth IRA contributions,
relevant cost-of-living adjustments to various deduction, married persons filing separately are treated as single if they
credit, and exclusion amounts shown below, the 2019 tax live apart for the whole year. If the spouses file separately
rate tables (see page 12), the deductible standard mileage and live together at any time during the year, and either
rates for 2019 (see pages 4), and the Social Security, of them is an active participant in an employer retirement
Medicare, and self-employment tax limits for 2019 plan, a deduction for traditional IRA contributions is
(see pages 5–6). Also keep in mind the possibility that phased out for each spouse over a MAGI range of $0 to
Congress may enact tax law changes that affect your 2019 $10,000. For Roth IRA contributions, the contribution
tax liability (see pages 3–4). limit for married persons filing separately is phased out
over the $0 to $10,000 MAGI phaseout range if they live
together at any time during the year, without regard to
Retirement Plan Cost-of-Living Adjustments participation in an employer retirement plan.

for 2019 Elective deferrals to employer retirement plans (pages
191–192, 196–198). The basic limit for elective deferrals in
Traditional IRA and Roth IRA contributions for 2019 2019 is $19,000, up from $18,500 in 2018. The $19,000
(pages 212–221, 249–252). The basic contribution limit applies to 401(k), 403(b), and 457 plans, the federal
limit for traditional and Roth IRAs is $6,000, or $500 government’s Thrift Savings plan, and pre-1997 salary-
more than in 2018. This is the first increase in the basic reduction Simplified Employee Pension (SEP) plans. If
contribution amount since 2013. The $6,000 limit is such plans allow, individuals who are age 50 or older by
increased by $1,000 for those who will be age 50 or older the end of the year may make an additional “catch-up
by the end of 2019. contribution.” The catch-up contribution limit remains
For traditional IRAs, the $6,000 or $7,000 (age 50 or $6,000 for 2019.
older) contribution limit is also the deductible limit except For a SIMPLE IRA, the deferral limit is increased in
for active participants in employer retirement plans with 2019 to $13,000, up from $12,500 in 2018, with a catch-
modified adjusted gross income (MAGI) above the phaseout up contribution of $3,000 for those age 50 or over by the
threshold. For active participants who are married filing end of 2019 (unchanged from 2018).
jointly or qualifying widows or widowers, the phaseout for Defined contribution plans and pension plans (pages
2019 deductible contributions to traditional IRAs begins 708–714). The overall limitation on employee and
at MAGI of $103,000 (from $101,000), with the phaseout employer contributions (including forfeitures) to a defined
complete when MAGI is $123,000 or more. For single contribution plan (such as a self-employed profit-sharing
taxpayers and heads of household, the phaseout threshold SEP or Keogh) is $56,000 (up slightly from $55,000 in
is $64,000 (from $63,000); the phaseout is complete when 2018). The general limitation on the annual benefit from
MAGI is $74,000 or more. a defined benefit pension plan is $225,000 (up from
The phaseout threshold for a married person filing jointly $220,000 in 2018).
who is not an active plan participant but whose spouse is
an active participant increases slightly to $193,000 (from Compensation limit (pages 709–710). The maximum
$189,000), and the phaseout for that nonparticipant amount of compensation that can be taken into account
spouse is complete when MAGI is $203,000 or more. when applying the contribution limits for qualified defined
For Roth IRAs, the $6,000 or $7,000 contribution limit contribution and pension plans is $280,000 (up from
(all Roth contributions are nondeductible) is phased out $275,000 in 2018).
for married persons filing jointly and qualifying widows SEP eligibility (page 246). Employees meeting the age and
or widowers with 2019 MAGI exceeding $193,000, up service requirements must be covered by a SEP if they have
from $189,000, and the phaseout will be complete if 2019 compensation exceeding $600 (no change).
MAGI is $203,000 or more. For single taxpayers and
heads of household, the phaseout threshold is increasing to Definition of key employee or highly compensated
$122,000 from $120,000; the phaseout will be complete if employee (page 192). The earnings threshold for
2019 MAGI is $137,000 or more. determining highly compensated employees under the

8 | Supplement to J.K. Lasser’s Your Income Tax 2019