What Changes You Can Expect from the IRS in 2020
- March 19, 2020
- Posted by: BenG-Admin
- Category: Blog, IRS, Taxes
As the 2020 tax season begins, the Internal Revenue Service is processing and accepting a continuous stream of federal tax returns for the 2020 tax year. Currently, the deadline to file your 2020 tax returns and make tax payments is April 15, however a few days ago, the IRS commissioner extended the deadline to file and pay to July 15th, if you owe 1million dollars or less.
As of now, the IRS anticipates that at least 90% of taxpayers will file their 2020 tax returns online. Online filing and selecting direct deposit, after all, is the safest and quickest method to file errorless income tax returns.
Although there weren’t a multitude of tax reforms last year, you should still expect a variety of changes when the time comes to file your tax returns in 2020. But before you find out about new changes from the IRS, you must be aware of what will remain the same in 2020.
Here are changes from 2019 that will still be intact. However, these existing changes can still affect your annual tax filing:
You can get rid of more than 60 percent of your income when it comes to charitable donations. It is ideal for those who prefer to give donations to specific qualified organizations.
As per 2019’s tax reform law, the highest mortgage deduction is $750,000 lower. It means if you have a current mortgage from $750,000 to $1 million, you can transfer it to your old deduction.
Entrepreneurs and small business owners can still use 529 college plans for their child’s education.
The SALT Deduction
So long as you want to itemize your deductions, you can deduct your property and sales taxes through state or local income. However, the limit is $10,000 or less.
Now, that you know changes that will co-exist, let’s take a look at some of the essential changes you can expect from the IRS in 2020:
For the 2020 tax year, the tax rates will remain the same. However, there are a few minor adjustments made by the IRS in the federal tax bracket. Practically, the brackets are now adjusted as per the new inflation rate in 2020.
Standard Deduction is Higher
In simple terms, the standard deduction isa reduction of you taxable incomes. And when you file your tax return, you will have the choice to itemize your deductions or choose the standard deduction.
If you, however, decide to itemize, you will have to calculate your entire deductions.. Realistically, itemizing is relatively more time-consuming. Ironically, it can work in your favor if your common itemized deductions are more than the standard deductions.
Although standard deductions are still double as per the 2018 tax reform law, there are, however, minor adjustments because of the inflation rate.
Elimination of Penalty for Not Having a Health Insurance
Over the past couple of years, there’s more conversation about the Affordable Care Act than ever. Though the plan still exists, you don’t have to face a penalty for not having one in 2019. And this change became in effect l for tax year 2019r. It means you wouldn’t have to bear the cost of no health insurance.
As much as getting rid of the penalties is a great idea, don’t think of it as an excuse to not get reliable health insurance. Though insurance can be expensive, it can save you more money than you think in the foreseeable future.
Higher Retirement Contribution
If you have retirement savings from the 2019 tax year, get ready to enjoy higher rewards on your tax returns. It is vital to remember that the retirement contribution applies to numerous kinds of retirement accounts. The idea is to allow more chances for folks to save.
In addition, you should take into account that the IRA contribution will increase r from $5000 to $6,000 in 2020. It means taxpayers can now increase tax-deductible contributions r made to their traditional IRAs. Simultaneously, 401(k) highest contributions will increase to $19,000.
You Will Have Estate Tax Exemption
The estate tax is simply a tax you have to pay after the inheritance of property. In fact, it’s one of the most straightforward adjustments in the 2020 tax year. From 2020 onwards, you can practically inherit more than $11.4 million throughout your lifetime. Additional Medical Expenses Deduction
When it comes to healthcare changes, the medical expense deduction is one of the most talked-about changes in the 2020 tax season. In 2020, you will get to deduct non-compensated medical expenses over 10% as per your adjusted gross income. (i.e., total net income minus additional deductions).
You should be aware of the fact that the lower deduction hurdle was momentarily expired at the start of 2019. Nevertheless, it did allow taxpayers to deduct medical expenses of more than 7.5% for a straight two years.
What about Forms?
Yes, there are updates and revisions for a variety of tax forms in 2020. The IRS, for instance, has revised Form 1040, which you use to file an individual tax return. In 2020, taxpayers will have to use fewer supplements and schedules on Form 1040. Furthermore, the consolidation of six schedules is now down to three schedules.
Taxpayers who are born prior to January 02, 1955, have an extra choice to make the most out of Form 1040-SR. The new form is specifically for senior citizens to file their tax returns without hassle. Similarly, taxpayers over 65 or older can also use the same form to file their 2020 tax returns via paper mail or electronically.
Fortunately, older taxpayers can now use the Form 1040-SR to report income from multiple sources like Social Security, distributions from a contribution retirement plan, investment income, annuities. Also, taxpayers 65 or older don’t necessarily have to be retired to benefit from this newform.
Well, the IRS is more broadminded than ever about in-person and as well as online tax preparation choices for taxpayers. In fact, the IRS views new changes as improvements that will enable eligible taxpayers to file their tax returns more quickly. Tax analysts and specialists also applaud the new changes set forth by the IRS that would inevitably allow taxpayers to navigate their tax problems much quicker..
Sure, the IRS has made a handful of tweaks to the 2020 tax season. Ironically, most of these changes became operational in the previous tax season. It means you should be mindful of the 2019 and s 2020 tax changes from the IRS to form a better picture.
Comparatively, the 2020 tax season will not be as chaotic as 2019. It means your business will be able to take a sigh of relief for some beneficial adjustments. It means you no longer have to worry about changes that might affect your annual taxes. There’s a good chance you will be able to figure out your taxes with much more convenience.
Ultimately, you should have a trustworthy tax specialist by your side. Think of it as a smart move for your business to identify missed deductions. A pro can help you create an annual tax checklist and offer up-to-date advice. A confident and reliable tax expert can help you figure out intricate details of the tax season that might not be visible to your eye.