Nov 13 Tax Updates
401(k) Limits Increased for 2020
Many contribution limits to retirement savings programs have increased for next year. Limits for participants in 401(k), 403(b), most 457 plans, and the Thrift Savings Plan are increased from $19,000 to $19,500. The catch up contribution limit for these plans is increased from $6000 to $6500. SIMPLE retirement accounts’ limit is increased to $13,500, up from $13,000. Also increased are the income ranges where the contribution deductible for IRAs and Roth IRAs phase out.
2020 Tax Adjustments Announced
The IRS has announced inflation adjustments for more than 60 provisions for tax year 2020, generally filed in 2021. The standard deduction is increased $200 to $400, depending on filing status. Thresholds for marginal tax rates are increased slightly, and the maximum Earned Income Credit is up to $6660. The Alternative Minimum Tax exemption amount is increased to $72,900 and the income at which it begins to phase out is also up. More details at the link.
Ready for Tax Credits?
The IRS recommends taxpayers take time now to see if they qualify for certain tax credits and be ready for the upcoming filing season. For people with low to moderate incomes, a refundable Earned Income Tax Credit may be available. Those who have a qualifying child under the age of 17 and meet other qualifications may be eligible for the Child Tax Credit. Credit For Other Dependents is available for those supporting children over 17, or other qualifying dependents. There are also two education credits available for taxpayers paying higher education costs for themselves, a spouse or dependent.
IRS Targets Syndicated Conservation Easements
The IRS is mounting a significant effort to investigate and in some cases prosecute abusive syndicated conservation easement transactions. “If you engaged in any questionable syndicated conservation easement transaction, you should immediately consult an independent, competent tax advisor to consider your best available options,” says IRS Commissioner Chuck Rettig. Affected taxpayers may avoid some penalties if they fully remove the improper contribution and tax benefits from their returns by filing an amended return.