Changes to tax law 2020?

Publication 936 (202), Mortgage Interest Deduction. Internal Revenue Service. Contribution limits to the 401 (k) plan and the retirement profit sharing plan. Retirement topics Contributions to get up to date.

Retirement Issues Simple IRA Contribution Limits Many taxpayers know that Oct. 17 is the deadline to file an extended tax return, but there are other tax deadlines on this date. Tax breaks A handful of states don't impose a sales tax, but that doesn't necessarily make them the best states for low taxes. The new law extended the deadline for filing an administrative lawsuit and filing a lawsuit for an unlawful embargo from nine months to two years.

The earned income tax credit (EITC) is a refundable tax credit that helps low-income taxpayers reduce the amount of tax owed dollar for dollar. The Inflation Reduction Act extended two of these tax exemptions that are available to individuals: the credit for non-commercial energy properties and the real estate credit for refueling alternative fuel vehicles. The IRS inflation adjustments are intended to keep federal taxes in line with inflation, so it's worth knowing the most recent figures. To apply the safe harbor method, taxpayers must use the applicable depreciation table in Appendix A of Publication 946, How to Depreciate Property.

This means that some people can stay in a lower tax bracket and those who received an increase in the cost of living can prevent part of their income from moving to a higher category. Even though the tax filing season is still months away, this is a good time of year to start thinking about next year's return. We'll just have to wait and see what Congress decides to do with these tax expander deductions and credits; keep an eye out for future events. The safe harbor method does not apply to a passenger car for which the taxpayer chose between the additional 100 percent depreciation deduction for the first year or chose to spend all or part of the cost of the passenger car.

This relief helps taxpayers who didn't properly adjust their withholding and estimated tax payments as needed for changes in the TCJA. As a result, more small business taxpayers can switch to the cash accounting method starting with the December tax deadline. Those who haven't filed their return (or haven't paid any taxes due) expect severe penalties before the tax filing deadline. The new law changed tax rates and categories, revised deductions for business expenses, increased the standard deduction, eliminated personal exemptions, increased the child tax credit, and limited or suspended certain deductions.

The RMD rules seek to get taxpayers to spend their retirement savings over their lifetime instead of transferring their wealth to beneficiaries.

Jacob Macdonnell
Jacob Macdonnell

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