This is for tax year 2020 (filed in April 2021). See below for 2021.
- Tax brackets increase with inflation.
- No change in IRA contribution limits.
- Multiple unique aspects due to COVID.
|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|
|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|
|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|
New & COVID Related
- 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.
- 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.
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.
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).
|2020 Roth IRA||Single||Married|
|Direct Contribution Phase-out||$124,000 to $139,000||$196,000 to $206,000|
|Backdoor/Conversion||Any income||No income|
Note: If you wish to pursue a backdoor contribution and have other/previous Traditional IRA assets there are additional rules.
Military & Veterans
Free Tax services
- IRS Free File (income under $69,000)
- Military OneSource (any)
- Volunteer Income Tax Assistance program (income under $56,000)
Special Rules to Remember
- Combat zone pay is non-taxable
- VA Disability Benefits are not included in gross income
There is too much individual variability to cover here, but as a point of reference here is a graphic courtesy of our friends at Visual Capitalist.