20 Dec Big 2020 Tax Changes You Need to Know
We can’t stress enough that 2019 is ending! Now is the time to think about this year’s return and the 2020 tax changes. While we won’t see anything major like the Tax Cuts and Jobs Act, there are still several changes that you need to know to plan your finances.
A few of these changes continue from the 2019 tax year and will show up on your 2019 return, but the remainder will come into effect on January 1, 2020, and be present on your 2020 return.
Increased Mileage Deductions
Business owners (especially real estate agents) do a lot of driving for work. If you track that mileage you accrue throughout the year, you can take a big deduction for it. Previously, the deduction was 54.5 cents per mile. As of January 1, 2019, that increased to 58 cents per mile. All the more reason to properly track your mileage!
No Penalty for Health Insurance
Most states will no longer charge a tax penalty for those who don’t have health insurance. This will be a big relief to some, as health insurance can often be expensive. That said, if you use health insurance in your business, that can grant you some big deductions as well. We recommend keeping an eye on the specific laws of the state you live in, as the law can vary. This is another adjustment that came into effect this year and will be present on your 2019 return.
Standard Deduction Increase
The standard deduction for 2019 rose up to $12,200 for single taxpayers and $24,400 for those married filing jointly. To account for inflation, that amount will be going up a small amount in 2020. Single taxpayers will get a $12,400 standard deduction and those married filing jointly will get a $24,800 deduction.
No itemized deduction limit
What started with the Tax Cuts and Jobs Act, no limits on itemized deductions, will be continuing into 2020. Like in 2019, most taxpayers will use the standard deduction.
Increased adoption credit
$14,080 was the limit for adoption deductions in 2019. In 2020, that amount is going up to $14,300.
New late filing penalty
The late filing penalty will increase in the 2021 tax year. The number will simply be adjusted for inflation, so keep an eye out for that when you’re preparing to file your 2020 return. Reminder: the penalty for this coming year is $330. After all, you don’t want to miss the tax deadline.
Have any other questions about 2020 tax changes or need help with your 2019 return? Call us at 614-524-4888!
