Tax Tips for 2020
Each year, individuals make financial decisions based on tax laws. As a result, we would like to bring to your mind some important tax changes and issues.
Taxpayers should start planning right away for federal tax changes that took effect as of January 1. The recent budget deal passed by Congress last month have created a new wave of tax changes. Beyond indexing elements of the federal tax code for inflation, tax year 2020 will see an extension of provisions that were set to expire (or already expired) in 2019 thanks to the congressional December budget deal, including an extension of the Work Opportunity Tax Credit (WOTC), the New Markets Tax Credit, and the employer credit for paid family and medical leave.
A handful of provisions created under the Tax Cuts and Jobs Act (TCJA) of 2017 were also set to expire beginning in tax year 2020, such as reforms to alcohol excise taxes. This provision was extended through tax year 2020 last month. While most TCJA provisions remain in place, taxpayers and policymakers should begin looking forward to 2021, when portions of the business provisions begin to expire, such as the full expensing of research & development costs and a more permissive interest deduction regime.
In late December, Congress also changed tax laws surrounding retirement accounts. For example, the age when someone must take required minimum distributions from retirement accounts went up from 70½ to 72, and the age limit for making traditional IRA contributions was eliminated. Policymakers also expanded the availability of multiple employer plans (MEPs), which allows smaller businesses to provide retirement plans at lower cost.
Please do not hesitate to contact US if you have any questions. We are here to serve!