In typical 2020 fashion, the tax changes for the year are numerous and, at times, complex. We’ve compiled several of the key highlights that you’ll need to know, though the list is not comprehensive. As always, we advise talking with a qualified tax professional about your specific situation. Now let’s talk about these changes for tax year 2020.

1. Recovery Rebate Credit

According to the IRS, if you didn’t get the full Economic Impact Payment, you may be eligible to claim the Recovery Rebate Credit on your tax return. If you didn’t get any payments at all, or got less than the full amounts, you may still qualify for the credit, even if you don’t normally file taxes. Visit Recovery Rebate Credit for more information.

2. Provisions added for the Earned Income Tax Credit (EITC)

Designed to help low to middle income earners, the Earned Income Tax Credit maximum has risen to $6,660 for qualifying taxpayers who have three or more qualifying children, up a bit from $6,557 the previous tax year. Find out if you qualify. Plus, if your earned income was higher in 2019 than in 2020, you can use the 2019 amount to figure your EITC for 2020. This temporary relief has been provided through the Taxpayer Certainty and Disaster Tax Relief Act of 2020. Learn more.

3. New marginal rates

For tax year 2020, the top tax rate stays at 37% for single taxpayers with incomes more than $518,400, or $622,050 for married couples filing jointly. The other rates are:

• 35% for incomes over $207,350 | $414,700 for married couples filing jointly
• 32% for incomes over $163,300 | $326,600 for married couples filing jointly
• 24% for incomes over $85,525 | $171,050 for married couples filing jointly
• 22% for incomes over $40,125 | $80,250 for married couples filing jointly
• 12% for incomes over $9,875 | $19,750 for married couples filing jointly
• 10% for incomes $9,875 or less | $19,750 or less for married couples filing jointly

4. Higher standard deduction

Good news for anyone who takes the standard deduction. It’s up $400 from 2019 for married filing jointly, raising to $24,800 for tax year 2020. For single taxpayers and married individuals filing separately, the standard deduction is $12,400, up $200, and for heads of households, the standard deduction is $18,650, up $300.

Learn more about two ways to reduce your taxable income.

For additional details about the 2020 tax year, visit irs.gov or consult a qualified tax professional.

---

Posted In:

• General Education