Author: Lisa M. Chavez, CPA, Senior Planning Associate
On Wednesday, the IRS issued the inflation adjustments and tax tables for the 2020 tax year (https://www.irs.gov/pub/irs-drop/rp-19-44.pdf).
What does this mean for our clients?
- Standard Deductions are up for all filing statuses
○ $24,800 – Married Filing Joint
○ $18,650 – Head of Household
○ $12,400 – Single and Married Filing Separately
- Qualified Business Income phaseout thresholds will increase for all filing statuses
○ $326,600 – Married Filing Joint
○ $163,300 – Single, Married Filing Seperate, and Head of Household
- The Estate Tax exclusion amount increased to $11,580,000, up from $11,400,000
- The Annual Gift tax exclusion amount remains at $15,000
- A number of other exclusions, credits, and deductions were indexed for inflation
How does Clearstead help?
- In projecting your taxable income each quarter, your tax team will continually monitor and assess your deductions to ensure that we are always using the right strategy for you. Taking advantage of these higher standard deductions may be the right course for certain taxpayers whose itemized deductions have been limited by certain aspects of the Tax Cuts and Jobs Act.
- Our holistic approach to strategizing for your tax needs means we don’t stop at your personal income taxes. We actively help you strategize your personal gifting all year long so you know that your long term gifting goals are being accomplished and the compliance and documentation is being taken care of.
- The estate tax exclusion has increased which provides more opportunity for planning and gifting. The exclusion is scheduled to sunset and may even change earlier depending on the outcome of the next election. Therefore, completing an estate tax analysis is essential for us to help put strategies in place to reduce estate tax liabilities and plan for the future.
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