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TAX145 - GUIDE: Key Tax Numbers (2020)

Key Numbers for 2020

Presented by Tim Weller


Individual Income Tax

Unmarried Individual (Other than Surviving Spouse and Head of Household)

If taxable income is:

The tax rate of taxable income is:

$9,875 and under10% of the taxable income
Over $ 9,875 but not over $40,125$987.50 plus 12% of the excess over $9,875
Over $40,125 but not over $85,525$4,617.50 plus 22% of the excess over $40,125
Over $85,525 but not over $163,300$14,605.50 plus 24% of the excess over $85,525
Over $163,300 but not over $207,350$33,271.50 plus 32% of the excess over $163,300
Over $207,350 but not over $518,400$47,367.50 plus 35% of the excess over $207,350
Over $518,400$156,235 plus 37% of the excess over $518,400

Married Individual Filing Jointly and Surviving Spouse

$19,750 and under10% of the taxable income
Over $19,750 but not over $80,250$1,975 plus 12% of the excess over $19,750
Over $80,250 but not over $171,050$9,235 plus 22% of the excess over $80,250
Over $171,050 but not over $326,600$29,211 plus 24% of the excess over $171,050
Over $326,600 but not over $414,700$65,543 plus 32% of the excess over $326,600
Over $414,700 but not over $622,050 $94,735 plus 35% of the excess over $414,700
Over $622,050$167,307.50 plus 37% of the excess over $622,050

Married Individual Filing Separately

If taxable income is:

The tax rate of taxable income is:

$9,875 and under10% of the taxable income
Over $9,875 but not over $40,125$987.50 plus 12% of the excess over $9,875
Over $40,125 but not over $85,525$4,617.50 plus 22% of the excess over $40,125
Over $85,525 but not over $163,300$14,605.50 plus 24% of the excess over $85,525
Over $163,300 but not over $207,350$33,217.50 plus 32% of the excess over $163,300
Over $207,350 but not over $311,025$47,367.50 plus 35% of the excess over $207,350
Over $311,025$83,653.75 plus 37% of the excess over $311,025

Head of Household

If taxable income is:

The tax rate of taxable income is:

$14,100 and under10% of the taxable income
Over $14,100 but not over $53,700$1,410 plus 12% of the excess over $14,100
Over $53,700 but not over $85,500$6,162 plus 22% of the excess over $53,700
Over $85,500 but not over $163,300$13,158 plus 24% of the excess over $85,500
Over $163,300 but not over $207,350$31,830 plus 32% of the excess over $163,300
Over $207,350 but not over $518,400$45,926 plus 35% of the excess over $207,350
Over $518,400$154,793.50 plus 37% of the excess over $518,400

 

Trusts and Estates

If taxable income is:

The tax is:

$2,600 and under10% of the taxable income
Over $2,600 but not over $9,450$260 plus 24% of the excess over $2,600
Over $9,450 but not over $12,950$1,904 plus 35% of the excess over $9,450
Over $12,950$3,129 plus 37% of the excess over $12,950


Qualified Business Income. For taxable years beginning in 2020, the threshold amount under Section 199A(e)(2) is $326,600 for married individuals filing jointly, $163,300 for married individuals filing separately, and $163,300 for unmarried individuals and heads of households.

The Tax Cuts and Jobs Act (TCJA) reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent.


Standard Deductions

Married Filing Jointly and Surviving Spouse$24,800Married Filing Separately$12,400
Single$12,400Head of Household$18,650

 

Kiddie Tax

Applies to unearned income more than $2,200 for children younger than 18 (and full-time students between ages 19 and 24 whose earned income does not exceed half of their support for the year).

TCJA modified the tax rates and brackets to calculate the tax on unearned income. However, the SECURE Act of 2019 rolled back the kiddie tax to pre-2018 rules. Therefore, net unearned income over the threshold amount of $2,200 for 2020 is taxed using the parents’ tax rates.

 

AMT

 

Exemption

Phaseout

Married Individual Filing Jointly and Surviving Spouse$113,400$1,036,800
Single$72,900$518,400
Married Individual Filing Separately$56,700$518,400
Trusts and Estates$25,400$84,800

 

Long-Term Capital Gains and Qualified Dividend Tax

Capital Gains Tax Rate

Unmarried

Married Filing Jointly

20%*$441,450+$496,600+
15%*$40,001–$441,450$80,001–$496,600
0%$0–$40,000$0–$80,000
*Additional 3.8% unearned income Medicare contribution tax applies to the lesser of net investment income or modified adjusted gross income (MAGI) above the following thresholds:
Married Filing Jointly$250,000Married Filing Separately$125,000
Single$200,000Head of Household$200,000

 

Health Savings Account (HSA) Maximum Contribution Limits

Self-Only CoverageIf younger than age 55: $3,550; 
if age 55–65: $4,550
Family CoverageIf younger than age 55: $7,100; 
if age 55–65: $8,100


Retirement Plan Limits

401(k), SARSEP, Section 457(b), 403(b) Elective Deferral Limit$19,500
Age 50+ Catch-Up for 401(k), SARSEP, 457(b), 403(b)$6,500
SIMPLE Elective Deferral Limit$13,500
Age 50+ Catch-Up for SIMPLE IRA$3,000
Traditional and Roth IRA Contributions$6,000
Age 50+ Catch-Up for IRA and Roth IRA$1,000
Section 415 Limit (Defined Contribution Plan)$57,000
Defined Benefit Plan Benefit Limit$230,000
Annual Compensation Limit for QRP, SEP, and 403(b)$285,000
Highly Compensated Definition$130,000
Control Employee$115,000
Key Employee in Top-Heavy Plan Definition$185,000

 

IRA Deduction Phaseout for Active Participants

Filing Status

Starting at:

Fully Phased Out at:

Single or Head of Household$65,000$75,000
Married Filing Jointly or Qualifying Widow(er)$104,000$124,000
Married Filing Jointly and Spouse Is Active Participant in an Employer Plan$196,000$206,000
Married Filing Separately and Either Spouse Is Active Participant in an Employer Plan$0$10,000

 

Roth Contribution Income Limits

Filing Status

Starting at:

Fully Phased Out at:

Single$124,000$139,000
Married Filing Jointly$196,000$206,000
Married Filing Separately$0$10,000

 

Business Health Insurance

Health Insurance Premium Deduction for Self-Employed100%
Limit on Employee Health Insurance Credit for Small Employers$27,600

 

Education Planning

U.S. Savings Bond Income Exclusion Phaseout Modified AGI $123,500 to $153,550 (joint)
Modified AGI $82,350 to $97,350 (others)
Coverdell Education Savings Account (Education IRAs) Annual Contribution Limit$2,000
Coverdell Education Savings Account PhaseoutModified AGI $190,000 to $220,000 (joint)
 Modified AGI $95,000 to $110,000 (others)
$2,500 American Opportunity Tax (HOPE) Credit PhaseoutModified AGI $160,000 to $180,000 (joint)
 Modified AGI $80,000 to $90,000 (others)
$2,000 Lifetime Learning Credit PhaseoutModified AGI in excess of $118,000 (joint)
 Modified AGI in excess of $59,000 (others)
Phaseout of $2,500 Interest Deduction on Education LoansModified AGI $140,000 to $170,000 (joint)
 Modified AGI $70,000 to $85,000 (others)
2019–2020 Tuition and Fees Increase at a 4-Year CollegePublic college: 2.3% in-state student;
2.4% out-of-state student
 Private college: 3.4%
2019–2020 Room and Board Increase at a 4-Year CollegePublic college: 2.9% in-state student;
2.9% out-of-state student
 Private college: 3%
2019–2020 Total Average Yearly Cost at a 4-Year College$21,950 public in-state; 
$38,330 public out-of-state;
 $49,870 private

 

Federal Estate and Gift Tax

Annual Gift Tax Exclusion per Donee$15,000
Annual Gift Exclusion to Non-U.S.-Citizen Spouse$157,000
Estate Tax Exemption$11,580,000
Lifetime Gift Tax Exemption$11,580,000
Generation-Skipping Transfer Tax Exemption$11,580,000
Special Use (Section 2032A) Valuation Reduction$1,180,000

 

Long-Term Care Premium Deductions

Qualified LTC Insurance Deductions: Subject to 10% of AGI Medical Expense Floor

Age

Limit

40 and younger$430
41–50$810
51–60$1,630
61–70$4,350
71 and older$5,430

Please note: Indemnity policy benefit payments that exceed the higher of the cost of long-term care or $380 per day will be taxed as income.


Medicaid1

Community Spouse Resource Allowance$25,284 minimum; $126,420 maximum
Monthly Maintenance Allowance $2,057.50 minimum; $3,160 maximum
Home Equity Limit$585,000 (state can opt to increase to $878,000)
“Income Cap” State Income Limit$2,313

 

Social Security

CPI Increase in Benefits1.6%
Maximum Monthly Benefit at Full Retirement$3,011/month
Retirement Earnings Exempt Amount Under FRA$18,240; $1 withheld for every $2 earned more
 than this amount
Retirement Earnings Exempt Amount Year of FRA$48,600; $1 withheld for every $3 earned more
 than this amount


Medicare                    

Medicare Part A (if applicable)
 Monthly Premium
$458 for fewer than 30 quarters of coverage
$252 for between 30 and 39 quarters of coverage
Medicare Part A
 Deductible and Coinsurance
$1,408 for 1–60 days
An additional $352 for 61–90 days
$704 for 91–150 days
All costs > 150 days
Medicare Part A
 Deductible for Skilled Nursing Facility in a Benefit Period
$176 per day during
21–100 days
Medicare Part B
 Deductible
$198 per year


Medicare Premium

 

Individual Filer

Married Filing Jointly

Medicare Part B
 Monthly Premium
*Some Medicare beneficiaries may pay less if certain conditions are met.
$144.60*
$202.40
$289.20
$376
$462.70
$491.60
$0–$87,000 
$87,001–$109,000
$109,001–$136,000
$136,001–$163,000
$163,001–$499,999
$500,000 and greater
$0–$174,000 
$174,001–$218,000
$218,001–$272,000
$272,001–$326,000
$326,001–$749,999
$750,000 and greater
Medicare Part D Deductible The amount paid for Part D deductibles, copayments, and/or coinsurance varies
 by plan.
Medicare Part D
 Monthly Premium Surcharge
(no surcharge)
$12.20 + plan premium
$31.50 + plan premium
$50.70 + plan premium
$70 + plan premium
$76.40 + plan premium
$0–$87,000 
$87,001–$109,000 
$109,001–$136,000
$136,001–$163,000
$163,001–$499,999
$500,000-and greater
$0–$174,000 
$174,001–$218,000 
$218,001–$272,000 
$272,001–$326,000
$326,001–$749,999
$750,000 and greater

Please note: Medicare premiums are based on MAGI from two years prior to the current premium year.

 

Payroll Taxes

 

Employee

Self-Employed

Social Security Tax6.2%12.4%
Social Security Wage Base$ 137,700
Medicare Tax1.45%2.9%
Additional Medicare Tax0.9% on Earnings Higher than the Following Thresholds:
Single or Head of Household$200,000
Married Filing Jointly$250,000
Married Filing Separately$125,000

1Please note: The 2020 Medicaid figures have not yet been released. All numbers are for 2019.

 

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer. 

Tim Weller is a financial professional with Weller Group LLC at 6206 Slocum Road, Ontario, NY 14519. He offers securities as a Registered Representative of Commonwealth Financial Network®, Member FINRA/SIPC. He can be reached at 315-524-8000 or at tim@wellergroupllc.com.

© 2020 Commonwealth Financial Network®