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What’s New for 2020 Individual Taxes?

What’s new with taxes this tax season some of these things were relate 2020 and some to 2021 and some to both. You can watch the video or read the highlights below.

Charitable Contributions

Charitable contributions — like vehicle donations, monies given to nonprofit organizations — are often a line item deduction. Changes for tax year 2020 include:

  • You will be able to deduct up to $300 even if you’re not itemizer 
  • We can deduct $400 this is for cash contributions only 
  • Not for noncash donations to Goodwill etc.

Economic Impact Payments

2.) Economic Impact Payments 

  • Received in the year of 2020 for example $1,200 for individuals, $2,400 for married couples plus $500 for qualifying children. 
  • These payments represent are refundable tax credits for your 2020 tax return
  • If you did not receive the payment, the check for the direct deposit, or if you feel you were shorted and it wasn’t the full amount we can true that up that will be trued up on your 2020 tax return with the form that relates to this tax credit. so if you were shorted you will be allowed the full credit.
  • If you received the check in 2020 and maybe you really weren’t entitled to the full check, or it was too much because oftentimes they are calculated based on your 2018 and 2019 tax returns, any overpayment you will not have to repay. 

Retirement Plan Distributions

3.) Retirement Plan Distributions

  • Due to the coronavirus, if you took distributions from your retirement accounts because of economic issues, they’re taxable. It has been that way but this year for 2020 if you took one of those distributions you’ll be able to pay the tax ratably over 3 years rather than all in 2020
  • The 10% early withdrawal penalty if you’re under the age of 59 and a half will not apply in this case 
  • There is also a repeal now of the minimum age for contributing to an IRA
    • In the past once you reach the age of 70 and 1/2 you can no longer contribute to an IRA even if you were still employed.
    • Beginning in 2020 taxpayers of any age can contribute to an IRA as long as they meet the tests which is normally a W-2 income or some other form of positive earned income to allow you to make that IRA contribution

Interest on Refunds

This year individual taxpayers will receive the interest on their refund calculated from the original due date which was April 15th, 2020 as long as the return was filed by the postponed due date of July 15th, 2020 so you will receive interest. 

Start Tax Planning Now

Avoid tax-time surprises. Now is the best time to project your tax liability and begin tax minimizing strategies. Schedule a planning meeting with a Burt CPA expert today.

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