Every year, certain states or the IRS might make changes that impact the tax returns of certain households or businesses. The following are brief overviews of some changes taking place for 2020.
Adjustments for Inflation
Tax laws are adjusted based on inflation, and recent adjustments that will impact your returns include an increase in standard deductions ($200 for individual filers and $400 for joint returns), two percent increases in tax brackets, and an increased alternative minimum tax exemption.
New Forms for Seniors
In the past, people over the age of 65 used the same tax forms as younger adults. This year, the IRS has a new form for seniors over 65, which is the 1040-SR. This form has no maximum income limit, and it looks more like the older 1040A form, which is shorter and less complex than the 1040 and its various schedules.
No More Alimony Deductions
If you got divorced in 2019 and are paying alimony, you will not be able to deduct those payments from your taxes, which was allowed for divorces prior to 2019. In addition, if you are receiving alimony, you no longer have to report the support as taxable income. Alimony payments should not impact your tax returns at all, while previously, both payers and recipients addressed alimony on their taxes.
More Retirement Savings
In 2019, taxpayers could contribute $500 more in tax-deductible funds to an IRA or 401(k). If you are over age 50, you can contribute an additional $1,000 to IRAs or $6,000 to 401(k) accounts as catch-up contributions.
Contact Our Tax Lawyers in San Francisco for Assistance Today
Tax returns can change in many ways from year to year. Before you file, contact a San Francisco tax attorney at Diosdi, Ching & Liu. Call 415.318.3990 or contact us online for assistance.