Page 13 - Supplement to Income Tax 2020

Estimating Your 2020 Taxes

Estimating Your 2020 Taxes

Note: The page references in the boldface headings below are For Roth IRAs, the $6,000 or $7,000 contribution
to the text of J.K. Lasser’s Your Income Tax 2020. Page references limit (all Roth contributions are nondeductible) is
within the items themselves (after the headings) are to the pages phased out for married persons filing jointly and
of this Supplement unless otherwise noted.
qualifying widows or widowers with 2020 MAGI
exceeding $196,000, up from $193,000, and the
In estimating your 2020 tax liability, take into account
relevant cost-of-living adjustments to various deduction, phaseout will be complete if MAGI is $206,000 or
credit, and exclusion amounts shown below, the 2020 more. For single taxpayers and heads of household,
tax rate tables (see page 12), the deductible standard the phaseout threshold is increasing to $124,000
mileage rates for 2020 (see page 5), and the Social from $122,000; the phaseout will be complete if 2020
Security, Medicare, and self-employment tax limits for MAGI is $139,000 or more.
2020 (see pages 6–7). Also see the recent tax law changes For both traditional and Roth IRA contributions,
on pages 3-4 that may affect your 2020 tax liability. married persons filing separately are treated as single
if they live apart for the whole year. If the spouses
file separately and live together at any time during
Retirement Plan Cost-of-Living Adjustments the year, and either of them is an active participant
for 2020 in an employer retirement plan, a deduction for
traditional IRA contributions is phased out for each
spouse over a MAGI range of $0 to $10,000. For
Traditional IRA and Roth IRA contributions for 2020 Roth IRA contributions, the contribution limit for
(pages 214–223, 251–254). The basic contribution married persons filing separately is phased out over
limit for traditional and Roth IRAs is $6,000, which is the $0 to $10,000 MAGI phaseout range if they live
unchanged from 2019. The $6,000 limit is increased together at any time during the year, without regard to
by $1,000 for those who will be age 50 or older by the participation in an employer retirement plan.
end of 2020.
For traditional IRAs, the $6,000 or $7,000 (age 50 Elective deferrals to employer retirement plans (pages
or older) contribution limit is also the deductible limit 193–195, 198–200). The basic limit for elective
except for active participants in employer retirement deferrals in 2020 is $19,500, up from $19,000 in
plans with modified adjusted gross income (MAGI) 2019. The $19,500 limit applies to 401(k), 403(b),
above the phaseout threshold. For active participants and 457 plans, the federal government’s Thrift Savings
who are married filing jointly or qualifying widows plan, and pre-1997 salary-reduction Simplified
or widowers, the phaseout for 2020 deductible Employee Pension (SEP) plans. If such plans allow,
contributions to traditional IRAs begins at MAGI individuals who are age 50 or older by the end of the
of $104,000 (from $103,000), with the phaseout year may make an additional “catch-up contribution.”
complete when MAGI is $124,000 or more. For The catch-up contribution limit increases to $6,500
single taxpayers and heads of household, the phaseout (up from $6,000 in 2019).
threshold is $65,000 (from $64,000); the phaseout is For a SIMPLE IRA, the deferral limit is increased
complete when MAGI is $75,000 or more. in 2020 to $13,500, up from $13,000 in 2019, with
The phaseout threshold for a married person filing a catch-up contribution of $3,000 for those age 50 or
jointly who is not an active plan participant but whose over by the end of 2020 (unchanged from 2019).
spouse is an active participant increases slightly to Defined contribution plans and pension plans (pages
$196,000 (from $193,000), and the phaseout for that 714–720). The overall limitation on employee and
nonparticipant spouse is complete when MAGI is employer contributions (including forfeitures) to a
$206,000 or more. defined contribution plan (such as a self-employed

Supplement to J.K. Lasser’s Your Income Tax 2020 | 9