What are the standard deductions for 2020?
- Standard Deduction - An individual typically has the choice of choosing the standard deduction or itemized deductions. The amount includes the sum of the basic standard deduction based on filing status, plus an additional standard deduction if the individual age is 65 or older, or blind. The standard deduction is limited for a taxpayer that may be claimed as a dependent.
The basic standard deduction by the individual filing status for 2020 inflation changes include:
|Single or Married filing Separately||$12,400||Increased $200 from prior year|
|Head of Household||$18,650||Increased $350 from prior year|
|Married filing Jointly & Surviving Spouse||$24,800||Increased $400 from prior year|
What are the marginal tax rates for 2020?
- Marginal Rates - Progressive taxation as income earnings rise taxation increases categorizing marginal tax rates. For example, a taxpayer filing single has income earned at $10,000 for 2020. $9,875 is taxed at 10% and $125.00 is taxed at 12% disregarding any standard deduction or itemized deduction option.
|Tax Rate||Single Unmarried Individuals||Married Filing Separately||Head of Household||Married Filing Jointly & Surviving Spouse|
|10%||Incomes at $9,875 or less||Incomes at $9,875 or less||Incomes at $14,100 or less||Incomes at $19,750 or less|
|12%||Incomes over $9,875||Incomes over $9,875||Incomes over $14,100||Incomes over $19,750|
|22%||Incomes over $40,125||Incomes over $40,125||Incomes over $53,700||Incomes over $80,250|
|24%||Incomes over $85,525||Incomes over $85,525||Incomes over $85,500||Incomes over $171,050|
|32%||Incomes over $163,300||Incomes over $163,300||Incomes over $163,300||Incomes over $326,600|
|35%||Incomes over $207,350||Incomes over $207,350||Incomes over $207,350||Incomes over $414,700|
|37%||Incomes over $518,400||Incomes over $311,025||Incomes over $518,400||Incomes over $622,050|
What is the beginning phaseout for the 2020 Lifetime Learning Credit?
- The Lifetime Learning Credit maybe available to a taxpayer paying for qualified education expenses. The credit may be up to $2,000 per taxpayer. There are eligibility requirements. In addition, the credit cannot be used along with the American Opportunity Tax Credit. The adjusted gross income beginning phase out amount used by joint filers has increased to $118,000 for 2020.
What is the exclusion amount for estates of decedents who die in 2020?
- Estates of decedents who die during 2020 have a basic exclusion amount of $11,580,000.00 for estates of decedents who died in 2020.
What is the annual exclusion amount for gifts during 2020?
- Gift Tax – There are many IRS factors involved including exclusions, deductions, and exceptions with gift tax. The following items are additional areas necessary to review when giving a gift.
- Lifetime exclusion amount
- Annual exclusion amount
- Married donor requirements
- Gift tax deductions
In summary, the annual exclusion for gifts is the same as 2019 at $15,000 (single) or $30,000 (combined married filing joint meeting all three requirements).
Regardless of the tax year, Deluzio & Company, LLP’s knowledgeable team is available to serve any necessary tax situations. Please contact our office for an appointment today.