As we move full steam ahead into 2020, SST has been taking note of the most important updates and changes you’ll need to know to tackle this year’s tax season like a professional. Whether you’re looking to get the most out of your refund or prepping for retirement, knowing what to expect and which tools are available is the first step toward navigating a successful tax year.
See below for SST’s list of the top tax updates to look for in 2020.
Tax Withholding Estimator Tool – The IRS has launched a new and improved Tax Withholding Estimator that’s designed to help workers target the refund they want by ensuring the correct amount of federal income tax has been taken out of their pay. This revised online tool incorporates the changes from the redesigned Form W-4. If an adjustment is needed, the Tax Withholding Estimator provides recommendations on how to complete an employer’s online Form W-4, or it provides the PDF form with key info already filled out.
Key Takeaway: The IRS stressed that people with more than one job may have to adjust their withholding to avoid having too little withheld.
Setting Every Community Up for Retirement Enhancement (SECURE) Act – The SECURE Act allows you to continue to make IRA contributions even after you turn 70.5 years old, but it’s important to understand how these contributions will affect your Required Minimum Distributions (RMD) and Qualified Charitable Disbursements (QCD).
Key Takeaway: Making a contribution does not exempt you from your RMD and will reduce the amount of your QCD by the amount contributed, including prior years. For more information, check out this helpful article!
Nonprofit “Parking Lot” Tax Repealed – This repeal was part of the Taxpayer Certainty and Disaster Tax Relief Act of 2019 and applies to amounts paid or incurred after Dec. 31, 2017. This effective date is retroactive, so any additional taxes paid by a nonprofit that were associated with employer-provided parking are eligible to be refunded.
Key Takeaway: Also included in this statute is a temporary suspension of the limits on charitable deductions related to disaster relief. Previously, an individual was only allowed to claim up to 60% of their adjusted gross income, while corporations could claim 10% of their taxable income.
Mileage Rate Reduction – In case you missed it, the mileage reimbursement rate for 2020 is 57.5 cents per mile, down from 58 cents in 2019.
Do you have questions on how to successfully navigate these changes? SST is always available to help. Contact us for more.