June 2019 E-Newsletter

June 2019 Q & A

Q: My income last year was too high to take the full qualified business deduction. What can I do to come closer to getting the full deduction next year?

A: The qualified business deduction (QBI), also known as a Section 199(a) deduction, is available to owners of businesses whose tax structures are pass–through entities. This deduction was subject to limits for couples filing taxes jointly with taxable income over $315,000 and for all others with taxable income over $157,500 in 2018

If your business income fluctuates and you're close to the threshold, you might push sales into next year to lower this year's income. You might also open a SEP–IRA, SIMPLE plan or 401(k) plan, where contributions are made pre–tax, lowering your taxable income.

Q: With all of the new tax rules, can I still deduct the interest I pay on student loans?

A: It depends on the amount of your interest payments and your income. Beginning in 2019, you can deduct up to 2,500 in qualified student loan interest if you meet income requirements. Take the full deduction if you are single or head of a household and have a modified adjusted gross income (MAGI) under $70,000, or if you are married and filing taxes jointly with a combined MAGI of less than $140,000. You can take a partial deduction up to $85,000 and $170,000, respectively.

MORE CONFIDENT.

The Conference Board Consumer Confidence Index® jumped to 131.4 in February, up from 121.7 in January. Both numbers, indicating that consumers expect the economy to keep expanding, are relatively high. In other Conference Board surveys, the organization found that consumers' assessment of current business and labor market conditions and their short-term outlook for income, business and labor market conditions also improved.

MORE EDUCATED.

Americans are getting more education. According to the U.S. Census Bureau's Current Population Survey, the number of people at least age 25 with a Master's as their highest degree doubled to 21 million from 2000 to 2018. The number of doctoral degree holders also more than doubled to 4.5 million during the same period. In 2018, 13.1% of aults held advanced degrees.

MORE MOBILE.

The U.S. may be near full employment, but employee tenure remains tenuous. The Employee Benefit Research Institute's analysis of U.S. Census Bureau data from the Current Population Survey (CPS) found that the median tenure of all wage and salary workers aged 25 or older stayed at about five years. Men's tenure, however, slipped, while women increased their median tenure, according to the EBRI analysis.

MORE VULNERABLE.

The Consumer Financial Protection Bureau released a report showing a dramatic increase in financial crimes against the elderly. According to the Bureau, reported incidents of elder financial exploitation exploded to more than 180,000 cases from 2013 to 2017, totaling $6 billion. The Bureau notes that many more incidents are likely not reported. Adults from age 70 to 79 had the highest average monetary loss - $45,300.

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