As we approach the end of 2019, the IRS has announced changes for 2020. Here is a quick list of changes that may impact your 2020 tax return:
1. The standard deduction will increase to $24,800 for married individuals filing joint returns or surviving spouses; $18,650 for heads of household, and $12,400 for unmarried individuals (other than surviving spouses) and married individuals filing separate returns.
2. The maximum amount of the earned income tax credit (for taxpayers with three or more children) will increase to $6,660 from $6,557 in 2019.
3. The maximum amount of the adoption credit will increase to $14,300—up from $14,080 in 2019.
4. The 2020 exemption amounts for the alternative minimum tax will be $113,400 for married individuals filing joint returns and surviving spouses, $72,900 for unmarried individuals (other than surviving spouses), $56,700 for married individuals filing separate returns, and $25,400 for estates and trusts—all increased from 2019.
5. The qualified business income threshold under Sec. 199A(e)(2) will increase to $326,600 for married individuals filing joint returns and to $163,300 for married individuals filing separate returns, single individuals, and heads of household—all increased from 2019.
6. The Sec. 911 foreign earned income exclusion amount will increase to $107,600 from $105,900 in 2019.
Here is a list of items that could impact the way you save for retirement in 2020:
1. The limit on elective deferral contributions to Sec. 401(k) plans, Sec. 403(b) plans, most Sec. 457 plans, and the federal government’s Thrift Savings Plan will increase from $19,000 in 2019 to $19,500 in 2020.
2. The catch-up contribution limit for those 50 and older will increase to $6,500 from $6,000 in 2019.
3. The maximum deductible individual retirement arrangement (IRA) contribution for 2020 will stay the same at $6,000.
4. For married couples filing jointly where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phaseout range will be $104,000 to $124,000 for 2020. These amounts also increased slightly from 2019. When an IRA contributor is not covered by a workplace retirement plan but is married to someone who is, the deduction will be phased out if the couple’s income is between $196,000 and $206,000—also an increase from 2019.
5. The AGI limit for the saver’s credit will be $65,000 for married couples filing jointly, $48,750 for heads of household, and $32,500 for single taxpayers and for married individuals filing separately.
6. Roth IRAs contributors listen up: The phaseout range for determining the maximum contribution will be $196,000 to $206,000 for married couples filing jointly and $124,000 to $139,000 for singles and heads of household.