I hope you and your family have a happy holiday season.
This newsletter explains some of the tax changes that are effective for 2020. Be sure to read Tax Tips.
E-FILE is available again this year. Refunds are usually deposited into your account within 2 weeks. Tax changes after 10/15/2020 will be posted at www.wackstax.com. Email: firstname.lastname@example.org
2020 TAX CHANGES + REMINDERS
- All children must have a social security number.
- Personal and dependent exemptions are eliminated (see child credit rules on page 2)
- Standard deduction goes from $12,200 to $12,400 (single), from $24400 to $24,800 (married),
- From $18350 to $18,650 (HOH), add $1,650 >= 65 and single or HOH, add $1,300 >=65 and married
|Fed Tax Rate||10%||12%||22%||24%||32%|
|Single||0 – 9,875||9,875-40,125||40,126-85,525||85,526-163,300||163,301-207,350|
|Head of Household||0 – 14,100||14,101-53,700||53,701-85,500||85,501-163,300||163,301-207,350|
35% – 207,351-518,400 (S)(HOH), 414,701-622,050 (M), 37% – > 518,401 (S)(HOH), > 622,051 (M)
- Medical Expenses are allowed if they exceed 7.5% of Adjusted Gross Income (AGI).
- Real Estate, State Income, Excise, and Foreign are all deductible (limited to $10,000)
- State and Local Sales Taxes can be substituted for State Income Tax
- Mortgage – fully deductible for first and second home up to $1,000,000 in acquisition debt (pre-2018), $750,000 (after 12/31/2017)
- Home Equity – is deductible if used for home improvements
- Points – partially or fully deductible.
- Investment – fully deductible up to investment income.
- Contributions are fully deductible for those who itemize or $300 allowed for non-itemizer. Cancelled checks or receipts are required for all donations and written substantiation is needed from charitable organizations for cash gifts over $250.
- Miscellaneous Deductions are NOT allowed.
- Gains are fully taxable. Losses can be used to reduce gains to zero. An additional $3,000 in losses can be used to reduce income. Make trades by 12/31/20.
- Child Care Credit for children under 13 requires listing the name, address, and SS# or 04# of the person paid. $3,000/child (2 children maximum)
- Mileage Allowance is 57.5 cents per business mile, 14 cents per charitable mile, and 17 cents per medical and moving mile.
- 20% business pass thru deduction (lots of rules)
There will be no house calls or in person meetings. MAIL, DROPOFF, or EMAIL (3 PDF files max)
LATE INFORMATION will be returned unless ARRANGEMENTS have been made.
The following date is when your tax information is expected based on last year.
I will call you after receiving your information. I am depending on your cooperation to ensure a smooth tax season.
Paul A. Wacks, EA, MST