It’s Not Too Early to Start Thinking About Tax Year 2020

Between now and April 15th you are going to file your 2019 tax return. Obviously, this is your focus. However, since tax year 2020 has already begun, it would be wise to begin placing some attention on your tax strategy for this year… 2020. After all, astute long-term tax planning is the key to lowering your tax liability, keeping more money in your pocket and making decisions that will help secure your future when you stop working.
So, what is in store for tax year 2020? The news is good but modest. This includes the IRS income tax adjustments for inflation. For example, the ceiling for the 12 percent tax bracket for those married filing jointly will rise from $78,959 to $80,250 (1.5 percent), and the 22 percent bracket ceiling will increase from $168,400 to $171, 050 (1.6 percent). The standard deduction for married couples will grow by $400.
You will also be able to save some on your health savings account and your 401(k), 403(b) and most 457 plans. However, you cannot make a full contribution directly to your Roth IRA if your adjusted gross income exceeds $124,000 for single taxpayers or $196,000 for married couples filing jointly. There is a strategy, however, to get around this that could work for you. Your tax professional should be able to explain this to you and help you make your decision. Finally, should you be considering making a lifetime gift, the estate tax exemption amount will increase by $180,000.
We suggest you ask your tax preparer to allocate time for some tax planning during your tax meeting. Should you be a client of ours, we will gladly arrange this with you. In addition, as a client, we offer you all the tax planning advice you need anytime during the year as a free service.
Professional Tax Services is a locally owned provider serving over 3,500 local residents and businesses. For more information call 661-259-1967 or visit www.scvprotaxservices.com. Through their complimentary EZ2 Thrive program, they provide unlimited free tax planning advice to their clients.