Updated thresholds and limits for 2020
By: Dean Dorton | December 3, 2019
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2019 Winter Edition | News & Views | Tax | Wealth & Estate Planning
For 2020, the standard deduction is $12,400 for single filers (up from $12,200 in 2019) and $24,800 for married taxpayers filing jointly (up from $24,400 in 2019).
Annual compensation to which Social Security tax applies is $137,700 for 2020 (up from $132,900 in 2019).
Social Security benefits
Individuals who are drawing Social Security benefits prior to attaining full retirement age will begin to suffer reductions in payments if they have earned income exceeding $18,240 in 2020 (up from $17,640 in 2019).
Adjustments for retirement accounts
The maximum annual addition to a defined contribution plan is increased to $57,000 for 2020 (up from $56,000 for 2019), and the corresponding maximum amount of compensation that can be considered as the base for retirement plan contributions is $285,000 for 2020 (up from $280,000 for 2019).
While the IRA annual contribution limit remains at $6,000 for 2020, the maximum amounts that individuals can elect to contribute to employer-sponsored plans have increased as shown in the chart below. Catch-up contribution amounts are available to those age 50 or over.
|Year||IRAs||SIMPLE IRA Plans||Other Employer Plans|
|Annual Contribution||Catch-Up Contribution||Elective Deferral||Catch-Up Contribution||Elective Deferral||Catch-Up Contribution|
Kentucky’s pension income exclusion
The amount of retirement income excludable from Kentucky income tax remains $31,110 for 2020.
Health savings accounts
The limits on contribution deductions for 2020 are $3,550 for self-only coverage (up $50 from 2019) and $7,100 for family coverage (up $100 from 2019). The additional “catch-up” contribution allowable for those age 55 or older remains $1,000.
Health flexible spending arrangements
The maximum voluntary employee salary reduction for employer-adopted FSAs (flexible spending arrangements) is $2,750 for 2020 (up $50 from 2019).
Federal estate, gift, and generation-skipping taxes will apply to cumulative subject transfers exceeding $11,580,000 in 2020, up from $11,400,000 in 2019.
The annual exclusion for gifts per donee remains $15,000 for 2020.
Cash wages paid for domestic service in the employer’s home of less than $2,200 are not subject to FICA in 2020 (up from $2,100 in 2019).
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