2020 Tax Law Changes

 

IRA Deduction Limit -- The maximum Traditional IRA is $6,000 with an additional $1,000 for taxpayer who are over 50 yrs old.



COVID-19 Related Distribution of Retirement Accounts -- If you distribute money from January 1, 2020 to December 30, 2020 and fit into the description of necessity because of the Coronavirus you may make a penalty-free withdrawal of retirement funds up to $100,000. The taxpayer may spread the withdrawal amount in taxable income over three years beginning in 2020. The taxpayer can recontribute the amount within 3 years and avoid taxable income.



IRA RMD (Required Minimum Distribution) age requirement has changed -- The 70 1/2 age limit has changed to 72 1/2. IRA RMD for 2020 is not required.



Solar Credits -- For 2020, the solar credit is 22% and no credit after 12/31/21.



Annual Gift Tax Exclusion --  The annual gift tax exclusion for 2020 is $15,000.



Estate Tax Exclusion --  The Estate Tax Exclusion for 2020 is $11.7 Million.



Mileage Allowance -- The business mileage allowance for 2020 is $57.5; Medical allowance is $.17 and charitable is $.14.



Bitcoin Transactions -- are taxable and must be reported as a capital gain. If dealing with foreign bitcoin exchanges an EBAR reporting of foreign investment must be made.



Healthcare -- The Healthcare mandate of the federal government has been revoked. However, California has a healthcare mandate for 2020. A person or family must have healthcare through a healthcare insurance; ACA or Medical. If not, the minimum penalty for a family of four would be $2,085. The penalty per adult is $695.



Plug-In Electric Vehicle Credit -- The plug-in electric vehicle credit is still available with up to a $7,500 maximum credit. Many brands of plugged-in electric vehicles have already reached their retail sales limits and no longer offer the credit. If the credit is important, ask the dealership if the credit is still available or go to the https://www.fueleconomy.gov/feg/taxevb.shtml




Tax tip: organizing your expenditures by category throughout the year will save time during tax season.

Copyright 2021

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