Your 2020 Tax Schedule
Note NEW changes for Inherited IRAs & Required Minimum Distribution
Employer-Sponsored Retirement Plans
- Maximum Contribution for those under 50: $19,500 per year
- Over 50 Catch Up Provision: $6,500 per year
- Maximum Contribution for those over 50: $26,000
- Base Contribution for those under 50 $6,000
- Over 50 Catch Up Provision $1,000
- Maximum contribution those over 50 $7,000
NEW: Inherited IRAs
- As of January 2020, Inherited IRA’s must be fully liquidated no later than 10 years after the date of death of the original IRA owner.
- This applies to Traditional IRAs as well as Roth IRAs. It also pulls in employer-sponsored retirement plans such as 401(k)’s, 403(b)’s Simple Plans, etc.
- Plans inherited prior to January 2020 can continue to withdraw money over the beneficiary’s lifetime.
NEW: RMD (Required Minimum Distribution)
- Acknowledging that Americans are living and working longer, the SECURE Act increases the RMD age from 70½ to 72, applicable to distributions made after Dec. 31, 2019, for individuals who reach 70½ from Jan. 1, 2020 on. OR a simpler explanation would be if you were born on January 1, 1948, or later you can defer RMD until the year you turn 72
- Note: This does not apply to Roth IRA’s as there is no requirement to take money out of the Roth IRA
Health Savings Accounts (HSA’s)
- Single $3,550
- Married $7,100
Annual Gift Tax Exclusion
- Individual Donor $15,000 per donee
Federal Estate Net Worth Tax Exemption
- Single Tax Payer $11,580,000
- Husband & Wife $23,160,000
State Estate Net Worth Tax Exemptions
- Oregon $1,000,000
- Washington $2,000,000
- California Zero, No Death Tax in Ca. Go Figure
Medicare Part B Premium (Part A is paid by the taxpayer via payroll tax)
(Means Tested Based on 2018 Adjusted Gross Income (AGI) per Household)
- Single $87,000 or less, the Premium is $144.60
- Joint $174,000 or less, the Premium is $144.60 each
- Single Income between $87,000 & $109,000, the Premium is $202.40
- Joint $174,000 & $218,000, the Premium is $202.40 each
If your income in 2018 was more than the listed amounts, then your Medicare premium will go even higher. You can see the full range on https://www.medicare.gov/your-
- Single Taxpayers $12,400 +$1,300 for those over 65
- Married Taxpayers $24,800 + $2,600 for those over 65
Up to 85% of Social Security Income is potentially subject to ordinary taxation
Viable Tax Deductions based on your circumstances
- Max out your tax-deductible retirement savings. For Oregon taxpayers that could mean a potential tax savings of 35% for every dollar you spend ahead to your old age
- Charitable Contributions and possibly Medical Expenses including health insurance as well as long term care insurance can help you get over the Standard Deduction
- State & Local taxes are capped at $10,000 for the year but anything below that is deductible
- Your Mortgage Interest can also help you get past the Standard Deduction
Capital Gains on the Sale of Your Home (while you are alive)
- Single, the first $250,000 is tax-free
- Married ,the first $500,000 is tax-free
At the death of the first spouse, his or her exemption dies with them, thus the surviving spouse’s exemption will drop to $250,000. This is bad if the house has a gain of over $250,000. When the surviving spouse passes so does the remaining exemption. Careful planning ahead is very important.
So that’s your tax schedule for 2020:
Should you have any questions, please reach out.
From my family to yours – A Prosperous New Year!
Isn’t It Amazing that some people know the Price of Everything and the Value of Nothing.