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//3 Ways Your Taxes Will Change in 2020

3 Ways Your Taxes Will Change in 2020

Incredibly, the 2019 tax year – and the entire decade – is coming to an end. A lot of key dollar figures, from standard deductions to retirement distribution limits, change each year due to inflation. Also, some aspects of the federal tax reform law of 2017 didn’t take effect until this year.

If you want to maximize your 2019 deductions, now is the time to consider your moves because once the new year rolls around it is too late.

When doing your year-end tax planning, keep in mind these 3 ways the return you file in 2020 will differ from the one you filed this year.

  1. 1. Higher Brackets: Income tax brackets are higher in 2019 than they were in 2018 due to inflation. Here are the tax rates and corresponding income brackets for 2019 if you are married filing jointly:

 

 

  1. 2. A higher standard deduction:  The standard deduction is a bit higher also on account of inflation:

 

 

  1. 3. Higher retirement account contribution limits: You can stash more away into retirement plans including 401ks, IRAs, etc.  These contributions may be deductible depending on your situation.
  • 401k base contribution: $19,000 (up from $18,500 last year
  • 401k catch-up contribution (for taxpayers age 50 and older): additional $6,000 (unchanged)
  • IRA base contribution: $6,000 (up from $5,500)
  • IRA catch-up contribution: (for taxpayers age 50 and older): additional $1,000 (unchanged)

For complete 2019 tax rate tables for ALL filing status’ visit

 

By | 2019-11-21T13:22:16-05:00 November 21st, 2019|Taxes|0 Comments