2020 Tax Year Guide

Taxes Jan 02, 2021

This is for tax year 2020 (filed in April 2021). See below for 2021.

Highlights

Tax brackets increase with inflation.
No change in IRA contribution limits.
Multiple unique aspects due to COVID.

Tax Charts

2020 Tax Bracket	Single Income	Married Income
10%	$0 to $9,875	$0 to $19,750
12%	$9,875 to $40,125	$19,750 to $80,250
22%	$40,125 to $85,525	$80,250 to $171,050
24%	$85,525 to $163,300	$171,050 to $326,600
32%	$163,300 to $207,350	$326,600 to $414,700
35%	$207,350 to $518,400	$414,700 to $622,050
37%	$518,400+	$622,050+

2020 Capital Gains	Single	Married
0%	$0 to $40,000	$0 to $80,000
15%	$40,000 to $441,450	$80,000 to $496,050
20%	$441,450+	$496,050+

2020 Additional Taxes	Single	Married
Social Security Tax Cap (6.2%)	$137,700 and under	$0 to $80,000
Net Investment Income (3.8%)	$200,000+ MAGI	$250,000+ MAGI

2020 Retirement Contribution Limits	Under Age 50	Age 50+
IRA	Up to $6,000	(+$1,000)
401(K) or TSP	Up to $19,500	(+6,500)
SEP IRA or Solo 401(K)	Up to $57,000	(+6,500)

2020 Standard Deduction	Single	Married
Amount	$12,400	$24,800

Unemployment compensation is taxable (will receive a 1099-G form), stimulus check are not taxable.
Unless you're self-employed, you can not deduct home office expenses.
Previous year IRS refund interest payment is taxable.
Flexible Spending Accounts - Can carry over funds from 2020 to 2021, and 2021 to 2022.
Charitable deduction (see below).

Deductions & Credits Overview

(New) Charitable deduction - Up to $300 non-itemized or up to 100% of AGI itemized for 2020 & 2021.
Medical expense deduction - Established permanent threshold of 7.5% of AGI.
Recovery Rebate Credit - For those who meet qualifications based on 2020 income but did not receive a stimulus check for $1,200 this year (see breakout section). Non-taxable.
Child Tax Credit - $2,000/child tax credit (income under $200,000/$400,000).
Self-employed deductions - Multiple.

Low Income

Earned Income Tax Credit (EITC) - Income under $56,844.
Saver's Credit - Income under $32,500/$65,000.

Charitable Deduction Overview

New for 2020 (and 2021) is the charitable deduction allowance.

Non-itemizers can take a charitable deduction of up to $300 on taxable income (but not Adjusted Gross Income (AGI) which is used for certain Roth IRA, investment surtax, and Medicare premium thresholds).

Itemizers can deduct up to 100% of AGI.

Recovery Rebate Credit Overview

The federal government sent out $1,200/$2,400 checks earlier this year in a tax credit advance, so most people have already received this amount directly.

However, if you didn't receive the $1,200 check but your 2020 income is qualifying you can still receive this.

$150,000 if married and filing a joint return
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing status‌‌Your payment will be reduced by 5% of the amount by which your AGI exceeds the applicable threshold above.

IRA Limits

Traditional IRA

This is the limit for how much you can get a deduction for contributing to a traditional IRA. You can still contribute above this point, it just won't be tax deductible.

2020 Traditional IRA	Single	Married
Deduction Phase-out	$65,000 to $75,000	$104,000 to $123,000
Non-deductable	Any income	Any income

Note: If you or your spouse are not covered by a workplace retirement plan additional rules apply.

Roth IRA

This is the limit for who can contribute to a Roth IRA. If you are above this, you can do a "backdoor" contribution by contributing to a Traditional IRA and converting it to a Roth (no limit).