2020 Tax Tips
Here are some changes and updates to the most recent tax laws for this current tax season.
2020 Tax Brackets
|Rate||For Single Individuals, Taxable Income Over||For Married Individuals Filing Joint Returns, Taxable Income Over||For Heads of Household, Taxable Income Over|
- The Standard deduction is now $12,400/$24,800.
- 401(k)/403(b)/408(k) contribution limits increased to $19,500 plus an additional $6,500 for employees over 50.
SECURE ACT (December 2019) highlights:
- There are new rules designed to assist small businesses with the creation of a retirement plan.
- New rules have been designed to make long-term part-time employees eligible for retirement plan contributions.
- There are increased penalties for failure to file retirement plan tax returns (form 5500)
- There was a repeal of maximum age for traditional IRA contributions.
- The age for required minimum distributions raised from 70 1/2 to 72.
- Tax free Section 529 Plan distributions may be used to pay student loans.
- Penalty-free retirement plan withdrawals can be used for expenses related to birth or adoption of a child.
Extender Legislation passed by Congress (existing law in 2019 extended through 2020)
- Mortgage insurance premiums are treated as mortgage interest.
- There is a reduction in the medical expense deduction floor from 10.0% of AGI to 7.5% of AGI.
- There is a return of the above-lie qualified tuition deduction.
- The Qualified energy credit is up to 10% of energy efficient residential improvements.
- There is an energy efficient commercial building deduction of up to $1.80 per square foot.
- Employer tax credits include paid family leave/work opportunity
- There is a health coverage tax credit (HCTC) for certain individuals.