The tax season is here again! This year, the IRS announced 4 recent changes in tax laws that can save you a lot.
1. Individual Income Tax
The IRS has increased the standard deduction, which can increase your taxable income.
New tax brackets in 2020:
The current standard deduction is $12,400 for singles, up from $12,200 in the prior year, and $24,800 for married joint filers, up from $24,400 in 2019.
2. Retirement savings contribution limits
The IRS has raised the employee contribution limit for 401(k), 403(b) and most 457 plans to $19,500, up from $19,000 in 2019.
3. Health Savings Account
You can save up to $3,550 if you’re an individual with self-only health coverage. That’s up from $3,500 in 2019. Account holders with family plans can save up to $7,100 in this account, up from $7,000 in 2019.
4. Gift and Estate Savings
The Tax Cuts and Jobs Act nearly doubled the amount that decedents can bequeath in death — or gift over their lifetime — and shield it from federal estate and gift taxes, which are 40%.
Lifetime gift and estate tax exemption: this year, the lifetime exemption is $11.58 million per individual, up from $11.4 million in 2019
Annual gift exclusion (the amount you can give to any other person without it counting against your lifetime exemption) : holds steady at $15,000 for 2020.
Resource: "Here’s a breakdown of the new income tax changes" by Darla Mercado and Jessica Dickler. https://www.cnbc.com/2020/01/08/heres-a-breakdown-of-the-new-income-tax-changes.html