Right now, you may be more concerned about your 2019 tax bill than you are about your 2020 tax situation. That\u2019s understandable because your 2019 individual tax return is due to be filed in less than three months.
\nHowever, it\u2019s a good idea to familiarize yourself with tax-related amounts that may have changed for 2020. For example, the amount of money you can put into a 401(k) plan has increased and you may want to start making contributions as early in the year as possible because retirement plan contributions will lower your taxable income.
\nNote: Not all tax figures are adjusted for inflation and even if they are, they may be unchanged or change only slightly each year due to low inflation. In addition, some tax amounts can only change with new tax legislation.
\nSo below are some Q&As about tax-related figures for this year.
\nHow much can I contribute to an IRA for 2020?
\nIf you\u2019re eligible, you can contribute $6,000 a year into a traditional or Roth IRA, up to 100% of your earned income. If you\u2019re age 50 or older, you can make another $1,000 \u201ccatch up\u201d contribution. (These amounts are the same as they were for 2019.)
\nI have a 401(k) plan through my job. How much can I contribute to it?
\nFor 2020, you can contribute up to $19,500 (up from $19,000) to a 401(k) or 403(b) plan. You can make an additional $6,500 catch-up contribution if you\u2019re age 50 or older.
\nI sometimes hire a babysitter and a cleaning person. Do I have to withhold and pay FICA tax on the amounts I pay them?
\nIn 2020, the threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc. is $2,200 (up from $2,100 in 2019).
\nHow much do I have to earn in 2020 before I can stop paying Social Security on my salary?
\nThe Social Security tax wage base is $137,700 for this year (up from $132,900 last year). That means that you don\u2019t owe Social Security tax on amounts earned above that. (You must pay Medicare tax on all amounts that you earn.)
\nI didn\u2019t qualify to itemize deductions on my last tax return. Will I qualify for 2020?
\nThe Tax Cuts and Jobs Act eliminated the tax benefit of itemizing deductions for many people by increasing the standard deduction and reducing or eliminating various deductions. For 2020, the standard deduction amount is $24,800 for married couples filing jointly (up from $24,400). For single filers, the amount is $12,400 (up from $12,200) and for heads of households, it\u2019s $18,650 (up from $18,350). So if the amount of your itemized deductions (such as charitable gifts and mortgage interest) are less than the applicable standard deduction amount, you won\u2019t itemize for 2020.
\nHow much can I give to one person without triggering a gift tax return in 2020?
\nThe annual gift exclusion for 2020 is $15,000 and is unchanged from last year. This amount is only adjusted in $1,000 increments, so it typically only increases every few years.
\nYour tax picture
\nThese are only some of the tax figures that may apply to you. For more information about your tax picture, or if you have questions, don\u2019t hesitate to contact us.
\n\u00a9 2020<\/p>\n","protected":false},"excerpt":{"rendered":"
Right now, you may be more concerned about your 2019 tax bill than you are about your 2020 tax situation. That\u2019s understandable because your 2019 individual tax return is due to be filed in less than three months. However, it\u2019s a good idea to familiarize yourself with tax-related amounts that may have changed for 2020. […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-14371","post","type-post","status-publish","format-standard","hentry","category-individual-tax"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14371","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=14371"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14371\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=14371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=14371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=14371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}