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There is no question that 2020 changed the landscape that we are all used to – but how has this chaotic year impacted existing tax law?
Greetings, loyal readers! Chances are good that you are already thinking about the next tax season. This past year’s deadline was adjusted from April into July due to the COVID-19 pandemic complicating everything about our ordinary lives. There is no question that 2020 changed the landscape that we are all used to – but how has this chaotic year impacted existing tax law? Follow along as we investigate!
The Disposition of Charitable Donations
When you need every last dollar to support yourself and your family, it can be hard to part with your money in the name of charity. However, charitable donations do have a bearing on your taxes, and tax law, this year as it has in years past. As long as you donated to a 501(c)3 organization, you can deduct up to $300 in donations thanks to a provision included in the 2020 CARES Act.
Stimulus: The Economic Impact Payouts
Stimulus checks arrived either through the conventional mail system or through direct deposits in which the money hit your checking account. Either way, the stimulus checks do not affect your gross income – which means that in terms of revised tax laws, you won’t lose money in your tax refund or have to pay more taxes as a result.
How Retirement Accounts Changed
Yes, even retirement accounts have changed due to the turmoil of the past nine months. Believe it or not, the majority of January-March was just business as usual, so to speak. For one example, let’s look at maximum contributions. Maximum contributions for 401k(s), 403(b)s, 457 plans, and SIMPLE IRAs all increased by an astounding $500. Meanwhile, the applicable income ceilings on Roth IRA contributions have also increased; this means that your adjusted gross income, or AGI, comes into play.
And What About Standard Deductions?
So now, let’s conclude with a look at the standard deductions that you can expect. Just for a quick explanation, here are two tax law data points to consider:
- $12,400 for all taxpayers who are either single or married but filing separately under the age of 65.
- $14,050 for all taxpayers who are single or married filing separately and over the age of 65.
Trust the Professionals at The Harding Group
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