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TAX REFORM CENTER

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for tax reform changes

There have been a number of tax law changes in the last couple of years. Rest assured, TurboTax has your back. Explore new tools and information to better understand how the new laws could affect you. Plus, if you ever want to talk
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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
Get the complete picture

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