Federal Tax Updates

 

Here’s what’s new for 2020:

  • Alternative Minimum Tax (AMT) exemption amounts increased:
  • IRA deduction expanded — You might be able to claim a deduction if both of these apply:
    • You were covered by a retirement plan.
    • Your income was less than $71,000 — or $118,000 for married filing jointly or qualifying widow(er)

If your spouse was covered by a retirement plan but you weren’t, you might be able to claim a deduction. Your income has to be less than $193,000 to claim a deduction in this case.

  • Current standard mileage rates:
    • $0.575 a mile for business use of a vehicle
    • 23.5 cents a mile for medical care
  • Earned Income Credit (EIC) maximum income changes are:
    • Three or more children lived with you and you earned less than $47,747 — or $53,267 if married filing jointly
    • Two children lived with you and you earned less than $47,440 — or $49,974 if married filing jointly
    • One child lived with you and you earned less than $41,756 — or $44,651 if married filing jointly
    • No children lived with you and you earned less than $15,820 — or $20,330 if married filing jointly
    • The maximum investment income you can earn and still get the EIC increased to $3,650.
  • Elective salary deferrals:
    • No exceptions — maximum amount is $18,000
    • SIMPLE plans only — maximum amount is $12,500
    • 403(b) plans and qualify for the 15-year rule — maximum amount is $21,000
    • Catch-up contributions for taxpayers age 50 or over has increased to $6,000. Exceptions include for Section 401(k)(11) and SIMPLE plans

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