TAX REFORM CENTER

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Key tax reform changes
for 2020 taxes

We understand that tax reform may be a lot to take in. Not to worry, we’ve gathered these key
topics to help keep you informed so you can have peace
of mind.

  • Standard deduction

    • Increased to $12,400 for Single or Married Filing Separately, $24,800 for Married Filing Jointly, $18,650 for Head of Household
    • If 65 and over, blind, or disabled will get an additional standard deduction of: $1,300 for Married Filing Jointly, Qualifying Widow, or Married Filing Separately. $1,650 for Single or Head
      of Household
  • Families

    • Economic Impact Payments increased. Individuals qualify for up to $1,800 and married filing joint couples qualify for up to $3,600, plus an additional $1,100 for each qualifying child as a refundable tax credit on the
      2020 return
    • For 2020 only, 2019 earned income can be used instead of 2020 earned income to qualify for Earned Income Credit and refundable portion of Child
      Tax Credit
    Related Articles:
    Coronavirus Tax Center What is an Earned Income Tax Credit & Do You Qualify for It?
  • Businesses

    • Self-employed individuals may defer payment of 50% of their Social Security portion of the SE tax liability until December 31, 2021, with the remaining 50% deferred until December 31, 2022
    • Employer payroll taxes for period of 3/27/2020 – 12/31/2020, 50% of the applicable employment taxes required to be deposited may be deferred until December 31, 2021 and the remaining portion may be deferred until December 31, 2022
    • Qualified Business Income Deduction Threshold amounts increased to $326,600 for married filing jointly, $163,300 for married filing separately, single and head-of-household
    Related articles:
    Tax Reform Changes for Businesses What is the Qualified Business Income (QBI) deduction?
  • 2020 tax rates & brackets

    • Income Brackets Expanded
      for 2020
    • Tax bracket rates stay the same
      for 2020
    Related articles:
    What are the federal tax rates
    for 2020?
    What’s the difference between 1099-NEC and 1099-MISC
  • Form 1099-NEC vs 1099-MISC

    • For 2020, IRS reinstated Form 1099-NEC
    • Reports nonemployee compensation previously reported
      on 1099-MISC
    Related Articles
    What are the federal tax rates
    for 2020?
    What’s the difference between 1099-NEC and 1099-MISC
  • Alternative
    minimum tax

    • Raises the income cap so that less people are impacted
    • Single taxpayer exemption raised to $72,900
    • Married Filing Jointly, Qualifying Widow exemption raised
      to $113,400
    • Married Filing Separately exemption raised to $56,700
    Related articles:
    How much is the AMT exemption?
  • Healthcare

    • Eliminates tax penalty for not having health insurance (starting in 2019)
    • Changes the floor on out-of-pocket medical expenses to 10% starting
      in 2019
    Related articles:
    What do I need to know about the 2020 tax extenders? Can I deduct donations to charity?
  • Charity Contributions/
    Deductions

    • A deduction for cash charity contributions of up to $300 are an “above-the-line” reduction to income if using the standard deduction.
    • Cash contributions to certain organizations are limited to 100% AGI instead of 50% limit. Noncash charitable contributions are limited to 50% adjusted gross income.
    Related Articles:
    What do I need to know about the 2020 tax extenders? Can I deduct donations to charity?
  • Retirement

    • Up to $100,000 Retirement plan distributions, repayments and loan relief for COVID-19 related distributions from eligible plans
    • May not be subject to 10% early distribution tax
    • Repayment allowed over
      3 years
    Related Articles:
    What is Form 8915-E Qualified 2020 Disaster Retirement Plan Distributions and Repayments?
  • American Rescue Plan

    • Third Stimulus Check-
      • Qualified taxpayers could get up to $1,400 for each taxpayer in your household plus $1,400 for each dependent. (phase-out range and income limits apply).
      • New from the first two stimulus payments is that you will receive stimulus payments for all your dependents, including adult dependents and college students.
      • IRS will determine eligibility based on your 2019 or 2020 return.
      • To find out if you are eligible and how much you can expect, visit our stimulus calculator.
    • Expanded Unemployment and Retroactive Relief
    • Enhanced Earned Income Tax Credit
    • Expanded Child Tax Credit
    • Tax Relief for College Students
    • Tax Relief for Self-Employed
    • Temporary Waiver for Paying Back Advance Premium
      Tax Credits
    Related articles:
    American Rescue Plan Third Stimulus Check

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