Everything is constantly changing in the world of tax.
2020 CHANGES
- Standard Deduction = $12,400 for single taxpayers.
- Standard Deduction = $24,800 for Married Couples.
- Estate Tax Unitary Exclusion = $11,580.
- Social Security Benefits increased 1.6%.
- Additional Standard Deduction for single filers who are blind or over age 65 = $1,650
- Employee Deferred 401k Contribution = $19,500.
- Employee Deferred 401k Catch-up Contribution = $6,500
- IRA Contribution = $6,000 (unchanged from 2019).
- IRA Catch-Up Contribution (age 50 or older) = $1,000 (unchanged from 2019).
- Combined Employee & Employer 401k Contribution = $57,000.
- Health Savings Account Contribution Amount for Individuals = $3,550.
- Health Savings Account Contribution Amount for Families = $7,100.
- Flexible Spending Arrangement Contribution = $2,750.
- Annual Gift Tax Exclusion = $15,000 (unchanged from 2019).
Tax Tip
As a general rule, you are not allowed to receive distributions from a qualified retirement plan until you reach age 59 1/2. If you do, you will be subject to a 10% penalty.
There is an exception, however – If you age 55 or older and get laid off, fired or quit your job, you can begin collecting 401k plan distributions without incurring the 10% penalty. Called the Age 55 Rule.
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