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Every April 15 millions of taxpayers throughout the United States file their income tax returns. Prior to filing their returns many taxpayers will go through their records to organize their income, deductions, and credits, and meet with their tax advisors/preparers to review and finalize their income tax returns.

You can take this opportunity to speak with your tax advisor/preparer about income tax strategies for 2020. Here are some “need to know” tax facts for 2020 that will help you with that conversation:

Federal Marginal Income Tax rates for 2020

 

Tax RateSingleMarried filing jointly
37%, for incomes over$518,400$622,050

 

35%, for incomes over

 

$207,350

 

$414,700

 

32% for incomes over

 

$163,300

 

$326,600

 

24% for incomes over

 

$85,525

 

$171,050

 

22% for incomes over

 

$40,125

 

$80,250

 

12% for incomes over

 

$9,875

 

$19,750

 

Federal standard deductions for 2020

 

Filing StatusStandard Deduction
Single$12,400
Head of Household$18,650
Married Filing Separately$12,400
Married Filing Jointly$24,800
Qualifying Widow(er)$24,800

 

An additional standard deduction amount for individuals who are blind and/or age 65 or older is $1,300 per spouse for married couples and $1,650 for single filers.

 

Net Investment Income Tax (NIIT)

This is a 3.8% surtax on net investment income affecting single taxpayers with more than $200,000 in modified adjusted gross income (AGI), and married couples filing jointly of more than $250,000 of modified AGI. Examples of investment income include interest, capital gains, dividends, rental income, royalties, income from non-qualified annuities, etc.

Child Tax Credit

$2,000 per “qualifying child” under 17 years old at the end of the year. There is an additional $500 tax credit that applies to other qualified dependents who are not qualifying children, such as a dependent child age 17 or older. The tax credit phased out as income exceeds $200,000 for single taxpayers and $400,000 for married couples filing jointly.

State and local taxes (SALT) deduction

The SALT deductions are still capped at $10,000 in aggregate per return, per year.

Mortgage Interest Deduction

Deductions of interest up to $750,000 (or $375,000 for married taxpayers filing separately) of aggregate mortgage debt used to build, acquire, or improve a property. This includes interest on a Home Equity Line of Credit (HELOC). Debt acquired prior to 12/15/2017 are grandfathered into the prior rules, which allow deductions for interest on mortgage up to $1 million.

Medical Expense Deduction

Thanks to a recent change in the law, medical expenses are deductible by all taxpayers who itemize their deductions, where non-reimbursed medical expenses exceed 7.5% of AGI for tax years beginning before January 1, 2021. Thereafter, the threshold is set to increase to 10% of AGI.

Estate/gift tax

The Federal unified estate and gift tax exemption in 2020 is $11,580,000 per estate ($23,160,000 for married couples who die in 2020). The New York State estate tax exemption is $5,850,000. Although there is no gift tax in New York State, certain taxable gifts made by New York residents within 3 years of death will be includible in their NYS taxable estate.

The federal annual gift tax exclusion amount remains at $15,000 in 2020.

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