Page 19 - Supplement to Income Tax 2020

Additions & Corrections to the Text of Your Income Tax 2020

Age limit repealed for traditional IRA contributions Discharge of principal residence indebtedness reinstated
(pages 214, 216, 217). Contributions to a traditional and extended (pages 322, 590–591). Under the Taxpayer
IRA for 2019 are not allowed if you were age 70½ or Certainty and Disaster Tax Relief Act, the exclusion for a
older at the end of 2019; this includes contributions discharge of principal residence indebtedness is allowed
made in 2020 (by the April 15 deadline) for 2019. for discharges in 2018, 2019 and 2020. See the new law
Under the SECURE Act, traditional IRA contributions discussion at page 4 of this Supplement.
may be made for 2020 (and later years) regardless Tuition and fees deduction reinstated and extended
of age, assuming you have taxable compensation (page 339, 618). The deduction for tuition and fees was
for the year. See the new law discussion at page 4 of reinstated for 2018 and 2019 and extended through 2020
this Supplement. by the Taxpayer Certainty and Disaster Tax Relief Act.
Lifetime “stretch” ended for most nonspouse See the new law discussion at page 4 of this Supplement.
retirement plan beneficiaries if owner dies after 2019 Standard deduction increased by net qualified disaster
(pages 189, 243, 259). Under the SECURE Act, most loss (page 345). The Taxpayer Certainty and Disaster
nonspouse beneficiaries of IRAs (traditional or Roth) Tax Relief Act allows taxpayers who do not itemize
and employee retirement plan accounts must withdraw deductions to increase their standard deduction by a net
the entire balance of the inherited account by the end qualified disaster loss from a major disaster declared in
of the 10th year after the year of the account owner’s 2018 through February 18, 2020. A qualified disaster
death if the account owner dies in 2020 or later. See loss is a casualty or theft loss of personal-use property
the new law discussion at page 4 of this Supplement. attributable to the major disaster, subject to a $500 floor

Tax relief for qualified disaster distributions and (rather than the regular $100 floor), but the 10% of
employer plan loans (pages 211, 259-260). The adjusted gross income floor does not apply.. See the
Taxpayer Certainty and Disaster Tax Relief Act provides new law discussion at page 5 of this Supplement.
favorable rules for qualified disaster distributions Waiver of AGI limit for disaster-relief charitable
received from eligible retirement plans and larger loan contributions (pages 372–375). The Taxpayer Certainty
limits from employer retirement plans to taxpayers and Disaster Tax Relief Act waives the 60% AGI limit for
who lived in areas damaged by, and suffered losses as cash contributions made from January 1, 2018, through
a result of, major disasters declared by the President February 18, 2020, if the donations are made for relief
in 2018 through February 18, 2020. The new law efforts in a qualified federally declared disaster area. See
relief is similar to that provided by 2017 and 2018 the new law discussion at page 5 of this Supplement.
legislation to victims of Hurricanes Harvey, Irma and
Maria, and the 2017 California wildfires. See the new Mortgage insurance premiums deduction reinstated
and extended (page 385). The deduction for mortgage
law discussion at page 5 of this Supplement.
insurance premiums was reinstated for 2018 and 2019
Gambling losses (page 313). The second sentence on and extended through 2020 by the Taxpayer Certainty
page 313 of Your Income Tax 2020 should state that and Disaster Tax Relief Act. See the new law discussion
the deduction for gambling losses, which is claimed as at page 4 of this Supplement.
an “other” itemized deduction on Schedule A, cannot Medical and dental expenses floor lowered to 7.5%
exceed the gambling income reported on Schedule 1 (pages 404, 405). The floor for deducting 2019
(Form 1040 or 1040-SR).
medical and dental expenses, which was scheduled to
Refund of state or local tax (pages 315–318). The first rise to 10% of AGI (from 7.5%), was lowered back to
four paragraphs on page 318 of Your Income Tax 2020, 7.5% of AGI by the Taxpayer Certainty and Disaster
ending with the “Note,” should be read before the Tax Relief Act. The 7.5% floor will also apply for 2020.
examples on page 316. See the new law discussion at page 4 of this Supplement.

Supplement to J.K. Lasser’s Your Income Tax 2020 | 15