2020
Year End
Year End
2018 Tax Cuts and Job Acts (TCJA)
This is the new tax law that was signed into law in December 2017.
The changes are to deductions, tax rates, exemptions and tax credits.
These changes remain in effect for 2019.
Deductions
There are 2 main deductions, the standard deduction and the itemized deductions.
You are allowed to claim one of these deductions on your return, not both. These
deductions are used to reduce the taxable income on your tax return.
- Standard Deduction
Single $12,400.00
Married Filing Jointly or Qualifying
Window(er) $24,800.00
- Married Filing Separately $12,400.00
- Head of Household $18,650.00
There is an additional standard deduction amount for elderly (65 years old and older) and blind taxpayers, which
is $1,300.00 for tax year 2020. This amount increases to $1,650.00 if the taxpayer is also unmarried.
Personal Exemption
There are no longer any personal exemptions
Tax Credits
-Child Tax Credit
The child tax credit has increased from $1,000.00 to $2,000.00 per eligible dependent.. The refundable portion is limited to $1,400.00 per eligible dependent.
-Child and dependent care credit. Generally, it’s 20% to 35% of up to $3,000 of daycare and similar costs for a child under 13, an incapacitated spouse or parent, or another dependent so you can work — and up to $6,000 of expenses for two or more dependents.
Affordable Care Act
There is no longer a "shared responsibility payment" required for the months in 2020 that you do not have health insurance.
Everyone in 2020 will still be affected by this health care act. Everyone who had health insurance in 2020 should receive a form 1095, which we must have to properly prepare your return. If you do not receive a form 1095 we will ask a number of additional questions about your health insurance coverage so that we can help you avoid any penalties and make sure you get all the credits to which you are entitled. If you were covered through the Healthcare Market Place, you must provide us with the paperwork they provide to you in January to calculate the insurance premium credit.
IRA
The contribution limit for Roth and traditional IRAs is unchanged at $6,000, with a catch-up contribution of $1,000 for those 50 and older. Remember, if your employer sponsors a retirement plan, then the deductions you can claim for contributions to a traditional IRA begin to phase out at a certain income level. Contributions to a Roth IRA also phase out at certain income.
To claim the contribution on your 2019 tax return, the contribution must be made on or before the due date of the return which is April 15, 2020.
This is the new tax law that was signed into law in December 2017.
The changes are to deductions, tax rates, exemptions and tax credits.
These changes remain in effect for 2019.
Deductions
There are 2 main deductions, the standard deduction and the itemized deductions.
You are allowed to claim one of these deductions on your return, not both. These
deductions are used to reduce the taxable income on your tax return.
- Standard Deduction
Single $12,400.00
Married Filing Jointly or Qualifying
Window(er) $24,800.00
- Married Filing Separately $12,400.00
- Head of Household $18,650.00
There is an additional standard deduction amount for elderly (65 years old and older) and blind taxpayers, which
is $1,300.00 for tax year 2020. This amount increases to $1,650.00 if the taxpayer is also unmarried.
Personal Exemption
There are no longer any personal exemptions
Tax Credits
-Child Tax Credit
The child tax credit has increased from $1,000.00 to $2,000.00 per eligible dependent.. The refundable portion is limited to $1,400.00 per eligible dependent.
-Child and dependent care credit. Generally, it’s 20% to 35% of up to $3,000 of daycare and similar costs for a child under 13, an incapacitated spouse or parent, or another dependent so you can work — and up to $6,000 of expenses for two or more dependents.
- The percentage is income-based: Families with AGIs of $15,000 or less can get a credit of 35% of their expenses, but that shrinks by one percentage point for every extra $2,000 of income.
- The rate is 20% for AGIs of more than $43,000.
- Payments made out of a dependent-care flexible spending account or other tax-advantaged program at work may reduce your credit.
- If your AGI is less than $56,845, it’s something to look into, though if you had more than $3,650 of investment income, dividends, capital gains and a few other things in 2020, you won’t qualify.
- Note: You can get up to $538 in 2020 from the earned income credit even if you don’t have kids, though only if your income is less than $15,820 as a single filer or $21,710 if you’re filing jointly.
- The credit begins to phase out at $214,520 of modified adjusted gross income, and people with AGIs higher than $254,519 don’t qualify.
- Also, you can’t take the credit if you’re adopting your spouse’s child.
- People who adopt special-needs children can get up to the full credit even if their actual expenses were less.
- In some cases, the adoption need not be final before you claim the credit; in others, it must be.
Affordable Care Act
There is no longer a "shared responsibility payment" required for the months in 2020 that you do not have health insurance.
Everyone in 2020 will still be affected by this health care act. Everyone who had health insurance in 2020 should receive a form 1095, which we must have to properly prepare your return. If you do not receive a form 1095 we will ask a number of additional questions about your health insurance coverage so that we can help you avoid any penalties and make sure you get all the credits to which you are entitled. If you were covered through the Healthcare Market Place, you must provide us with the paperwork they provide to you in January to calculate the insurance premium credit.
IRA
The contribution limit for Roth and traditional IRAs is unchanged at $6,000, with a catch-up contribution of $1,000 for those 50 and older. Remember, if your employer sponsors a retirement plan, then the deductions you can claim for contributions to a traditional IRA begin to phase out at a certain income level. Contributions to a Roth IRA also phase out at certain income.
To claim the contribution on your 2019 tax return, the contribution must be made on or before the due date of the return which is April 15, 2020.
