The beginning age for taking required minimum distributions (RMDs) rose from 70½ to 72.Here are the most significant retirement plan provisions that may affect your 2020 tax return: The Setting Every Community Up for Retirement Enhancement (SECURE) Act went into effect on January 1, 2020. Two recent pieces of legislation made changes to the tax rules for retirement savings. Changes to retirement savings rules and limits For single filers and heads of household, the additional standard deduction is $1,650. Married taxpayers age 65 or older get an additional $1,300 per person for each spouse age 65 or older. Married couples filing jointly: $24,800.Single and married filing separately filers: $12,400.The standard deductions were increased for inflation in 2020: Taxpayers who don't itemize deductions can claim the standard deduction, an amount predetermined by the IRS that reduces taxable income. The standard deduction increased for inflation To help you out, we put together a list of the most important updates for filing your 2020 tax return. Part of that preparation includes understanding what's changed from last year - and there are plenty of updates and changes taking effect. Whether you file your tax return as soon possible, skate in just before the April 15, 2024 deadline, or request an extension, it's never too early to start preparing for filing your 2020 taxes in 2021. For 2023, the credit is nonrefundable and you may claim the credit up to 35% of $3,000 in expenses ($1,050) for one child, an incapacitated spouse or parent, or another dependent so that you can work and up to 35% of $6,000 in expenses ($2,100) for families with two or more dependents.ĭon’t worry about knowing these tax rules - TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your answers.For information on the third coronavirus relief package, please visit our “ American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post. Child and Dependent Care Credit is a credit you may be able to take if you paid someone to take care of your child while you worked anytime during the year or while you looked for work, the Child and Dependent Care Credit is another tax credit that you may see more of if you had a lower income.If you contributed to retirement in 2023 and now fall within the income thresholds to qualify for the Saver’s Credit due to lost wages, you may see a credit worth up to $1,000 if you’re single or $2,000 for married filing jointly. Saver’s Credit is a tax credit you can take just for contributing to your retirement.If you had lower income in 2023 as a result of lost wages, you may now qualify for EITC, which can be worth $7,430 for a family with three kids. Earned Income Tax Credit is a huge credit that is based on your income.In fact, the IRS says 20 percent of people miss both of these tax credits. There are some tax credits and deductions that are based on income, which you may not have been eligible for in the past due to higher income which you may now be eligible for: A few examples are the Earned Income Tax Credit and The Saver’s Credit. Take advantage of newfound credits and deductions.When you get ready to pay your estimated quarterly taxes, you can also take your unemployment income into consideration if you don’t have federal taxes withheld from your unemployment. If you are an independent contractor, side-gigger, or freelancer, keep in mind that unemployment income will be added to your net income from self-employment and may be taxable. Self-employed take unemployment into account when paying estimated taxes. If you don’t choose voluntary withholding, or if you don’t withhold enough you can make estimated tax payments. Taxpayers can choose to withhold up to 10% from unemployment benefits by filling out a Form W-4V Voluntary Withholding Request and giving it to the agency that pays their benefits. Because unemployment income is taxable, one option is to have federal taxes taken out of your unemployment income so there are no surprises when it’s time to file your taxes. This is especially important if you didn’t have federal taxes withheld from your unemployment income. Once you are able to find a job, take your unemployment income into account when you are filling out a W-4 withholding certificate for your employer. Get started now Tax Tips for People Receiving Unemployment Income
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