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Few tax changes for federal filers

by CHARLES H. FEATHERSTONE
Staff Writer | February 23, 2020 11:34 PM

MOSES LAKE — It is not March yet, but the Wednesday, April 15, deadline to file federal tax returns is not all that far away.

Fortunately, this year, the tax code is relatively unchanged from last year.

“There are not a lot of changes,” said Stroud Kunkle, an accountant with Sutter, Kunkle and Thompson in Moses Lake. “There isn’t a whole lot of change from (last year).”

But there are some changes following the big revision of the tax code Congress passed in late 2018. The Internal Revenue Service continues to tweak the forms — consolidating last year’s six supplemental schedules into three, for example — and has introduced a larger print 1040-SR form for filers over the age of 65.

The biggest change this year is the elimination of the tax penalty for failing to have health insurance. Enacted as part of the Affordable Care Act, filers had to provide proof of insurance with their tax returns, or claim an exemption, in order to avoid the penalty.

“A lot of people got hit with that,” Kunkle said.

While the law still remains in place, and health insurance is still required, the penalty itself has been reduced to zero. Kunkle said filers receiving subsidies for insurance purchased on exchanges will still have to reconcile their “premium tax credits” when they file.

Another big change this year is for divorce decrees signed on or after Jan. 1, 2019. Whoever is paying alimony can no longer deduct those payments from their taxes, and the recipient of the alimony no longer has to declare it as income.

“It’s almost like part of the property settlement,” Kunkle said.

Kunkle also said the limits on contributions to traditional individual retirement accounts (IRAs) and Roth IRAs has been lifted beginning this year, and the age someone is required to take distributions from an IRA account has also been raised to 72 from 70 1/2 for anyone who didn’t turn 70 1/2 in 2019.

Minor changes include the restoration of the deductibility of mortgage insurance, removed as part of the 2017 tax law, and some expansion of what tax-deferred 529 college savings plan can be used for.

“Qualified higher education expenses now include apprenticeships and up to $10,000 in student loan repayments,” Kunkle said.

Kunkle said that so far based on the returns his firm has prepared, there seem to be no problems with the IRS’ computer system and the agency’s ability to receive electronic returns and process refunds quickly.

“Things are pretty good, and it takes 10 days for a direct deposit refund,” he said. “There’s no holdup with the IRS.”

Charles H. Featherstone can be reached at cfeatherstone@columbiabasinherald.com.