2019 Year-End Tax Guide

THE MARCUM 2019 YEAR-END TAX GUIDE | www.marcumllp.com

MODERN UPDATES FOR THE MODERN FAMILY

The traditional “nuclear” family is becoming a thing of the past. While same-sex couples are finally able to tie the knot, opposite-sex couples are forming blended families and adopting their

step-children. More and more individuals are taking on long-term relationships and not getting married. Additionally, divorce rates are rising, and the average number of children in a family is decreasing. This creates special considerations for the evolved “modern family.” What’s New? n Potential Tax Refunds! With the help of the Promoting Respect for Individuals’ Dignity and Equality – or PRIDE – Act (House Resolution 3299), legally married same-sex couples may be allowed to amend their tax returns for all of the years they’ve been married. Current law limits taxpayers who previously filed separate individual returns to file amended joint returns only up to the standard three-year statute of limitations period. If approved by the Senate and signed into law, the PRIDE Act could result in over $60 million in tax refunds. The act also “fixes” one of the many technicalities that still exist in the tax code post-DOMA by removing references to husband/wife/ male/female and providing for gender- neutral language. n Elimination of the Alimony Deduction – With the ability to get married comes the ability to get divorced! Divorce agreements signed after December 31, 2018, are subject to new rules as part of the Tax Cuts and Jobs Act of 2017 (TCJA). The spouse who pays alimony to an ex-spouse will no longer be able to deduct the alimony on his or her income tax return, and the recipient spouse will no longer have to include the alimony payment in his or her taxable

income. Note,under

the new law, a payor spouse can make alimony payments through an individual retirement

account, provided the payee spouse is at least 59 ½ years old; otherwise the 10% penalty applies. This “back-door” payment through an IRA may provide a tax benefit for the higher-income spouse by enabling the use of pre-tax dollars.

n The Working Families Tax Relief Act could help save tax dollars for more than 230,000 low-income same- sex couples and families. Specifically, the bill increases the availability of the Earned Income Tax Credit (EITC) by expanding the age of eligibility. The bill is anticipated to bring more than 29 million people above the poverty line, increasing the LGBT poverty line and child poverty line as well.

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