IRS posts 2020 inflation adjustments and tax tables

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IRS posts 2020 inflation adjustments and tax tables

The IRS on Wednesday issued the 2020 annual inflation adjustments for many tax provisions as well as the 2020 tax rate tables for individuals and estates and trusts (Rev. Proc. 2019-44). These adjusted amounts will be used to prepare tax year 2020 returns in 2021.

Many amounts will increase for inflation in 2020. The standard deduction will increase to $24,800 for married individuals filing joint returns or surviving spouses, $18,650 for heads of household, and $12,400 for unmarried individuals (other than surviving spouses) and married individuals filing separate returns.

The maximum amount of the earned income tax credit (for taxpayers with three or more children) will increase to $6,660 from $6,557 in 2019.

The maximum amount of the adoption credit will increase to $14,300 up from $14,080 in 2019. That is also the maximum amount that will be excludable from an employee’s gross income for qualified amounts paid or expenses incurred by an employer under an adoption-assistance program.

The 2020 exemption amounts for the alternative minimum tax will be $113,400 for married individuals filing joint returns and surviving spouses, $72,900 for unmarried individuals (other than surviving spouses), $56,700 for married individuals filing separate returns, and $25,400 for estates and trusts, all increased from 2019.

The Sec. 179 amount for tax years beginning in 2020 will be $1,040,000 with a phaseout threshold of $2,590,000, slight increases from 2019.

The qualified business income threshold under Sec. 199A(e)(2) will increase to $326,600 for married individuals filing joint returns and to $163,300 for married individuals filing separate returns, single individuals, and heads of household, all increased from 2019.

The Sec. 911 foreign earned income exclusion amount will increase to $107,600 from $105,900 in 2019.

The basic exclusion amount for determining the unified credit against the estate tax will be $11,580,000 for decedents dying in calendar year 2020, up from $11,400,000 in 2019. The annual gift tax exclusion amount remains at $15,000, but the gift tax annual exclusion for gifts of a present interest to a spouse who is not a U.S. citizen will increase to $157,000 in 2020 from $155,000 in 2019.

Various penalty amounts for failure to file tax and information returns or furnish payee statements are also being adjusted for inflation for 2020.

Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.

Research & References of IRS posts 2020 inflation adjustments and tax tables|A&C Accounting And Tax Services
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