Like many Americans, you may be looking to get a head start on filing your taxes. If so, then you should begin planning for any changes to the tax code. This will help you avoid penalties and maximize your potential refund. Fortunately, an experienced Denver tax planning attorney at Wiegand Attorneys & Counselors, LLC is familiar with the Tax Cuts and Jobs Act. We know how it could positively or negatively affect your 2020 taxes, depending on your particular situation. As the tax laws continue to change, it is even more important to pay close attention to your taxes and develop a sound tax plan. Here are the most important changes to the tax code that you should be aware of for filing in 2020.
Standard Deductions for the 2020 Tax Season
One major change to the 2020 tax code involves a higher standard deduction. The standard deduction for single taxpayers is now $12,400. Comparably, the standard deduction for married joint taxpayers is now $24,800.
However, if you are an older taxpayer or blind, then you can still claim the additional standard deduction of $1,300. This did not change from 2019. Also, if you are a single filer who is blind or over the age of 65, then you can claim an additional $1,650 standard deduction. This is an increase of $50 from the previous tax season.
Saving More for Retirement
Along with a higher standard deduction, changes to the 2020 tax code may affect your retirement savings. This is due to the Internal Revenue Service (IRS) raising the employee contribution limit on retirement plans an additional $500. After this change, individuals can now save up to $19,500 in 2020. If you are over 50, then you can save an additional $6,500 in your 401 (k), 403 (b) or 457 plan.
Even so, the IRS did not make any changes to Individual Retirement Account (IRA) limits. In 2020, if your adjusted gross income exceeds certain thresholds, then you cannot make a full contribution directly to a Roth IRA. Those thresholds are $124,000 for single filers and $196,000 for married couples.
Healthcare Savings for Your 2020 Taxes
One of the other changes to the 2020 tax code involves health care savings. Health care savings plans allow you to put away pretax income to use for qualified health expenses. In 2020, you can save up to $3,550 for single health care plans and $7,100 for family plans. You can also roll over health savings account balances from one year to the next.
Increase in Estate Tax Exemptions
Finally, another change to your 2020 taxes involves the amount of money you can gift each year or in death. In 2020, the lifetime gift and estate tax exemption is $11.58 million per individual. This was an increase from $11.4 million in 2019.
Contact Our Denver Tax Planning Law Firm
If you have questions about your 2020 taxes, then we can help. Our Denver tax planning law firm has the experience and resources needed to tackle even the toughest tax issues. The tax laws are constantly changing, and 2020 is no exception. We can help you avoid tax penalties and ensure you get the highest refund. Call us today at (303) 625-6280 or fill out our confidential contact form. We are ready to help you plan for the new tax year.