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Unformatted text preview: Department of the Treasury Your Federal Income Tax For Individuals Publication 17 Catalog Number 10311G For use in preparing 2019 Returns Internal Revenue Service TAX GUIDE 2019 Get forms and other information faster and easier at: • IRS.gov (English) • IRS.gov/Spanish (Español) Feb 18, 2020 • IRS.gov/Chinese (中文) • IRS.gov/Korean (한국어) • IRS.gov/Russian (Pусский) • IRS.gov/Vietnamese (TiếngViệt) Department of the Treasury Internal Revenue Service Your Federal Income Tax For Individuals Contents What's New ....................... 1 Reminders . . . . . . . . . . . . . . . . . . . . . . . . 2 Introduction . . . . . . . . . . . . . . . . . . . . . . . 3 Part One. The Income Tax Return . . . . 1 Filing Information . . . . . . . . . . . 2 Filing Status . . . . . . . . . . . . . . 3 Dependents . . . . . . . . . . . . . . 4 Tax Withholding and Estimated Tax . . . . . . . . . . . . . . . . . . . . 5 5 20 25 36 Part Two. Income . . . . . . . . . . . . . . . . 5 Wages, Salaries, and Other Earnings . 6 Tip Income . . . . . . . . . . . . . . . . 7 Interest Income . . . . . . . . . . . . . . 8 Dividends and Other Distributions . . . 9 Rental Income and Expenses . . . . . . 10 Retirement Plans, Pensions, and Annuities . . . . . . . . . . . . . . . . . 11 Social Security and Equivalent Railroad Retirement Benefits . . . . . . . . . . . 12 Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 44 52 54 61 65 Part Three. Gains and Losses . . 13 Basis of Property . . . . . . . 14 Sale of Property . . . . . . . 15 Selling Your Home . . . . . . 16 Reporting Gains and Losses . . . . . . . . . . . . . . . . . . . . . . . . . Part Four. Adjustments to Income . . . . 17 Individual Retirement Arrangements (IRAs) . . . . . . . . . . . . . . . . 18 Alimony . . . . . . . . . . . . . . . . 19 Education-Related Adjustments . . 20 Other Adjustments to Income . . . . . . . . . . . . . . . . . . . . . . 73 . . . 81 . . . 85 . . . . . . 96 . 96 101 107 113 22 Medical and Dental Expenses . 23 Taxes . . . . . . . . . . . . . . . 24 Interest Expense . . . . . . . . . 25 Contributions . . . . . . . . . . . 26 Nonbusiness Casualty and Theft Losses . . . . . . . . . . . . . . 27 Other Itemized Deductions . . . 2019 Tax Table 2018 Tax Computation Worksheet . . . . . . . . 157 162 167 175 . . . . . . 183 . . . . . . 191 . . 196 . . 196 . . 199 . . 202 . . 209 . . . . . . . . . . 212 214 220 234 236 . . . . . . . . 253 Your Rights as a Taxpayer . . . . . . . . . . . . . 255 Index 118 131 134 137 . . . . 2019 Tax Rate Schedules . . . . . . . . . . . . . . 254 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 How To Get Tax Help . . . . . . . . Part Six. Figuring Your Taxes, and Refundable and Nonrefundable Credits 28 How To Figure Your Tax . . . . . . . . . 29 Tax on Unearned Income of Certain Children . . . . . . . . . . . . . . . . . 30 Child and Dependent Care Credit . . . 31 Credit for the Elderly or the Disabled . . 32 Child Tax Credit and Credit for Other Dependents . . . . . . . . . . . . . . . 33 Education Credits . . . . . . . . . . . . 34 Earned Income Credit (EIC) . . . . . . . 35 Premium Tax Credit (PTC) . . . . . . . 36 Other Credits . . . . . . . . . . . . . . . . . . . 117 . . . . . . . . . . . . . . . . . . . . . . . . 256 . . . . . . . . . . . . . . . . . . . . . . . . . . 258 Where To File . . . . . . . . . . . . . . . . . . . . . 276 Part Five. Standard Deduction, Itemized Deductions, and Other Deductions . . . . . 153 21 Standard Deduction . . . . . . . . . . . . . 153 All material in this publication may be reprinted freely. A citation to Your Federal Income Tax (2019) would be appropriate. The explanations and examples in this publication reflect the interpretation by the Internal Revenue Service (IRS) of: • Tax laws enacted by Congress, • Treasury regulations, and • Court decisions. However, the information given does not cover every situation and is not intended to replace the law or change its meaning. This publication covers some subjects on which a court may have made a decision more favorable to taxpayers than the interpretation by the IRS. Until these differing interpretations are resolved by higher court decisions or in some other way, this publication will continue to present the interpretations by the IRS. All taxpayers have important rights when working with the IRS. These rights are described in Your Rights as a Taxpayer in the back of this publication. What's New This section summarizes important tax changes that took effect in 2019. Most of these changes are discussed in more detail throughout this publication. Future developments. For the latest information about the tax law topics covered in this publication, such as legislation enacted after it was published, go to IRS.gov/ Pub17. Due date of return. File your tax return by April 15, 2020. See chapter 1. Form 1040-SR. Form 1040-SR, U.S. Tax Return for Seniors, has been introduced for 2019. You can use this form if you were born before January 2, 1955. The form generally mirrors Form 1040. Fewer numbered schedules. This year, there are only 3 numbered schedules instead of 6. Schedules 2 and 4 were combined into Schedule 2 and it's where you will report any additional taxes you may owe. Schedules 3 and 5 were combined into Schedule 3 and it’s where you will report any credits that you didn't claim on Form 1040 or 1040-SR. IRA and pension reporting. You will now report your IRA distributions and pensions and annuities on separate lines. Use lines 4a and 4b on Form 1040 or 1040-SR to report IRA distributions and the taxable amount. Use new lines 4c and 4d to report pensions and annuities and the taxable amount. See the instructions for lines 4a and 4b and lines 4c and 4d in the Instructions for Form 1040 and 1040-SR. Capital gain or (loss) is now reported on line 6. In 2018, capital gain or (loss) was reported on Schedule 1 (Form 1040), line 13. In 2019, it will be reported on Form 1040 or 1040-SR, line 6. Health care coverage shared responsibility payment. For 2019, you no longer need to either make a shared responsibility payment or file Form 8965 if you don't have minimum essential health care coverage for part or all of 2019. The “Full-year health care coverage or exempt” box has been removed from Form 1040. Standard deduction amount increased. For 2019, the standard deduction amount has been increased for all filers. The amounts are: • Single or Married filing separately—$12,200; • Married filing jointly or Qualifying widow(er)—$24,400; and • Head of household—$18,350. See chapter 21. Qualified business income deduction. The simplified worksheet for figuring your qualified business income deduction is now Form 8995, Qualified Business Income Deduction Simplified Computation. If you don't meet the requirements to file Form 8995, use Form 8995-A, Qualified Business Income Deduction. For more information, see each form's instructions. Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount is increased to $71,700 ($111,700 if married filing jointly or qualifying widow(er); $55,850 if married filing separately). The income levels at which the AMT exemption begins to phase out have increased to $510,300 ($1,020,600 if married filing jointly or qualifying widow(er)). Qualified opportunity investment. If you held a qualified investment in a qualified opportunity fund at any time during the year, you must attach Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, to your return. For more information, see Form 8997 and its instructions. Virtual currency. If, in 2019, you engaged in a transaction involving virtual currency, you will need to file Schedule 1 (Form 1040 or 1040-SR). See the instructions for Schedule 1 (Form 1040 or 1040-SR) for more information. Email address. An optional field for your email address has been added to Forms 1040 and 1040-SR. Medicaid waiver payments. Changes have been made to how Medicaid waiver payments are treated for purposes of the earned income credit. See Line 18a—Earned Income Credit (EIC) in the Instructions for Forms 1040 and 1040-SR. Standard mileage rates. The 2019 rate for business use of your vehicle is 58 cents a mile. The 2019 rate for use of your vehicle to get medical care or to move is 20 cents a mile. See Moving Expenses in Pub. 3, Armed Forces' Tax Guide. Adoption credit. The adoption credit and the exclusion for employer-provided adoption benefits have both increased to $14,080 per eligible child in 2019. The amount begins to phase out if you have modified adjusted gross income (MAGI) in excess of $211,160 and is completely phased out if your MAGI is $251,160 or more. Identity Protection Personal Identification Numbers (IP PINs). New IP PINs are generated every year. This year, they will generally be sent out by mid-January 2020. Use this IP PIN on your 2019 return as well as any prior-year returns you file in 2020. Recent legislation. Three tax laws were enacted on December 20, 2019. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 extended certain previously expired tax benefits to 2018 and 2019, and provided tax relief for certain incidents federally declared as disasters in 2018 and 2019. The extended benefits and the disaster relief may now be claimed on your 2018 and 2019 returns, if you qualify. The Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act) made other changes, such as increasing the penalty for failing to file a tax return and modifying the rules related to the taxation of unearned income of certain minor children. The SECURE Act relaxed certain retirement plan contribution and distribution requirements beginning January 1, 2020. The Virginia Beach Strong Act provides special treatment to certain contributions made for the relief of families of victims of the Virginia Beach mass shooting. You may need to file an amended return using Form 1040-X, Amended U.S. Individual Income Tax Return, to claim the benefits now available for 2018. See Form 1040-X and its instructions at IRS.gov/Form1040X for details. Affected 2018 forms that had lines “Reserved” or “Reserved for future use” have reinstated those lines for 2018. For an extensive list of the changes these new laws introduced, including changes relevant to the 2019 Pub. 17 chapters, see Impact of New Legislation next. Impact of New Legislation Penalty for failure to file. The penalty for failure to file a tax return within 60 days of the due date (with extensions) has increased to the smaller of $435 or the amount of tax owed. The increased penalty applies to returns whose due date (with extensions) is after December 31, 2019. (Chapter 1) Tax benefits. The following tax benefits are now available for 2018 and 2019. For simplicity, however, we have limited our discussion to the benefits available for the 2019 tax year. For 2018 information, see Publication 17 (2019) the forms, instructions, publications, and Internal Revenue Code sections listed. As noted above, you may need to file Form 1040-X to claim the benefits for 2018. Key affected 2019 Pub. 17 chapter(s) are listed in parentheses at the end of the bullet. There may also be information in your tax return instructions on these benefits. • Deduction for tuition and fees. You can deduct qualified expenses paid in 2019. For more information, see Form 8917. (Chapters 2, 7, 17, and 19) • Deduction for mortgage in- surance premiums. You can treat amounts you paid for qualified mortgage insurance during 2019 as home mortgage interest. For more information, see the Instructions for Schedule A (Form 1040 or 1040-SR). (Chapters 9 and 23) • Exclusion of qualified principal residence indebtedness. Qualified principal residence indebtedness discharged in 2019 can be excluded from income. For more information, see the Instructions for Form 982. (Chapter 12) • Credit for certain nonbusi- ness energy property. You can claim the nonbusiness energy property credit in 2019, if you meet the 2019 criteria. For more information, see the Instructions for Form 5695. (Chapter 36) • Alternative motor vehicle credit. You may be able to Page 1 claim the alternative motor vehicle credit for vehicles purchased in 2019. For more information, see the Instructions for Form 8910. (Chapter 36) • Credit for two-wheeled plug-in electric vehicles. You may be able to claim the credit for qualified two-wheeled plug-in electric vehicles for vehicles acquired in 2019. For more information, see the Instructions for Form 8936. (Chapter 36) • Credit for alternative fuel vehicle refueling property. You may be able to claim this credit for alternative fuel vehicle refueling property you placed in service during 2019. For more information, see the Instructions for Form 8911. (Chapter 36) • Deduction for medical ex- penses. You may be able to deduct the part of your medical and dental expenses that exceed 7.5% of your adjusted gross income. This deduction was already available for 2018 and is now extended to 2019. For more information, see the Instructions for Schedule A (Form 1040 or 1040-SR). (Chapter 22) • Certain distributions from retirement plans when there is a disaster. New rules provide for tax-favored distributions from and repayments to retirement plans (including IRAs) for certain taxpayers who suffered economic losses as a result of certain incidents federally declared as disasters in 2019. For more information, see the Forms 8915-C and 8915-D. (Chapters 10 and 17) • Certain other retirement plan distributions and also contributions. Beginning January 1, 2020, certain retirement plan distributions and contribution requirements have been relaxed. Taxpayers do not need to have suffered an economic loss from a federally declared disaster to benefit from these relaxed rules. For more information, see Pub. 590-A. • Increased standard deduc- tion. If you suffered a casualty loss attributable to certain incidents federally declared as disasters in 2019, you may be able to claim a larger standard deduction. For more information, see the Instructions for Form 4684. (Chapter 21) • Earned income credit (EIC) and additional child tax credit (ACTC). If you were impacted by certain incidents federally declared as disasters in 2019, you can elect to use your prior year earned income to figure both your 2019 EIC and 2019 ACTC. For more information, see Pub. 596 and the Instructions for Schedule 8812 (Form 1040 or 1040-SR). (Chapters 32 and 34) • Personal casualty losses. Special rules and return procedures apply to personal casualty losses attributable to certain incidents federally declared as disasters in 2019. For more information, see the Instructions for Form 4684. (Chapter 26) • Charitable contributions. Certain cash contributions you made for relief efforts for federally declared disasters that occurred in 2019 are not subject to the 60% limit. A special rule applies to certain cash contributions made to the spouse or any dependents of victims of the mass shooting in Virginia Beach on May 31, 2019. For more information, see Pub. 526. (Chapter 25) • Tax on certain children with unearned income (Kiddie tax). A child may be able to calculate their tax based on the tax rate of his or her parent. For more information, see the Instructions for Form 8615. (Chapter 29) • Credit for production of Indian coal. For more information, see the Instructions for Form 8835. • Indian employment credit. For more information, see the Instructions for Form 8845. • Mine rescue team training credit. For more information, see Form 8923. • Empowerment zone tax incentives. For more information, see the Instructions for Form 8844 and the Instructions for Schedule D (Form 1040 or 1040-SR). (Chapter 16). • Second generation biofuel producer credit (formerly known as the “cellulosic biofuel producer credit”). For more information, see the Instructions for Form 6478. • Incentives for biodiesel and renewable diesel. For more information, see the Instructions for Form 8864. • Credit for electricity pro- duced from certain renewable resources (other than wind). For more information, see the Instructions for Form 8835. • Credit for construction of new energy efficient homes. For more information, see the Instructions for Form 8908. • Special depreciation allow- ance for second generation biofuel plant property. For more information, see the Instructions for Form 4562. • Energy efficient commer- cial buildings deduction. For more information, see Internal Revenue Code section 179D. • Special rule for sales or dispositions to implement Federal Energy Regulatory Commission (“FERC”) or State electric restructuring policy. For more information, see Internal Revenue Code section 451(k). • Incentives for alternative fuel and alternative fuel mixtures. For more information, see the Instructions for Form 8864. • Three-year depreciation for race horses 2 years old or younger. For more information, see the Instructions for Form 4562. • Seven-year recovery period for motorsports entertainment complexes. For more information, see the Instructions for Form 4562. • Accelerated depreciation for business property on an Indian reservation. For more information, see the Instructions for Form 4562. • Expensing of certain quali- fied film and television and live theatrical productions. For more information, see Pub. 535. • Credit for certain expenditures for maintaining railroad tracks. For more information, see the Instructions for Form 8900. Reminders Listed below are important reminders and other items that may help you file your 2019 tax return. Many of these items are explained in more detail later in this publication. Disaster-related tax relief. If you were affected by a disaster in 2016 or 2017, see Pub. 976 for information on how your 2019 taxes may be affected. For information on disaster assistance and emergency relief information for the 2019 tax year, as well as prior years, see IRS.gov/Disaster. Page 2 Special rules for eligible gains invested in Qualified Opportunity Funds. If you have an eligible gain, you can invest that gain into a Qualified Opportunity Fund (QO Fund) and elect to defer part or all of the gain that is otherwise includible in income. The gain is deferred until the date you sell or exchange the investment or December 31, 2026, whichever is earlier. You may also be able to permanently exclude gain from the sale or exchange of an investment in a QO Fund if the investment is held for at least 10 years. For information about what types of gains entitle you to elect these special rules, see the Instructions for Schedule D (Form 1040 or 1040-SR). For information on how to elect to use these special rules, see the Instructions for Form 8949. Enter your social security number (SSN). Enter your SSN in the space provided on your tax form. If you filed a joint return for 2018 and are filing a joint return for 2019 with the same spouse, enter your names and SSNs in the same order as on your 2018 return. See chapter 1. Secure your tax records from identity theft. Identity theft occurs when someone uses your personal information, such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. For more information about identity theft and how to reduce your risk from it, see chapter 1. Taxpayer identification numbers. You must provide the taxpayer identification number for each person for whom you claim certain tax benefits. This applies even if the person was born in Publication 17 (2019) 2019. Generally, this number is the person's SSN. See chapter 1. Foreign-source income. If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by law or a tax treaty. This is true whethe...
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