Tax season is officially on and you can start filing your taxes. Same as any other year, the deadline for filing your federal income taxes is April 15. Unless you file for a tax extension, you must file your taxes by the deadline. Those who file for an extension will have an additional 6 months, pushing the tax season 2020 deadline to October 15.
For the most part, your tax bill should remain the same if your withholding and income haven’t changed in 2019. Especially if you’re going to claim the standard deduction which was increased to $12,400 for single filers and $18,650 for the head of household. Given that the standard deduction increase is about 1.6%, the same percentage of increase applies to most tax brackets.
Therefore, your tax bill is likely to be the same as the last year if your tax rate is 10, 12, 22, or 24 percent. Below, you can see the highlight of tax changes that will be effective in your 2019 taxes that are due on April 15.
Tax Changes in 2020
The most notable change in 2020 taxes is the standard deduction. Below, you can see the standard deduction changes for each filing status.
- Single: $12,400
- up from $12,200
- Married Filing Jointly: $24,800
- up from $24,400
- Head of Household: $18,650
- up from $18,300
Other than the standard deduction, there has been a change on the threshold that you could itemize your medical expenses. While you could claim medical expenses that exceed 7.5% of your AGI in previous years, it has been increased to 10%. Also, the contribution limit for a traditional IRA increased, making the deductible amount higher for your 2019 taxes.
If you’re under 50, the maximum contribution amount to a traditional IRA was $6,000 and if over 50, $7,000. So all the contributions you made in 2019 is all tax-deductible if you choose to itemize.
Same Deductions and Credits in 2020
While the changes aren’t that big, there are a few main things that stay the same potentially important on your tax return.
Child Tax Credit and its refundable amount is the same as in previous years. Thanks to the Tax Cuts and Jobs Act of 2017 the CTC amount and its refundable amount is going to be the same through 2025.
If your mortgage principal is under $750,000, you can claim the mortgage deduction. Since this was lowered in 2018 from $1 million, mortgages prior to 2018 can still benefit from the grandfathered deduction. Meaning you can claim the deduction even if it is over $750,000.
One of the deductions that remain the same is the charitable contributions. You can deduct up to 60% of your income in qualified charitable donations. To claim this deduction, you don’t necessarily need to itemize though. You can claim charitable contribution deduction under above-the-line deductions even if you take the standard deduction.