Current Tax News Items
2019 Year End Spending Bill
Congress has passed and the President is expected to sign a year end spending bill that incorporates some changes to the tax code
Some of these changes are as follows:
Monthly social security income benefits increase by1.6% in 2020. The wage base maximum for social security taxes increase to $137,700
The alternative minimum tax (AMT) exemption for 2020 for married taxpayers filing joint returns will be $113,400 and for single taxpayers $72,900
Mileage Rates for 2019 and 2020
The mileage rates for 2019 are 58 cents for business use of an automobile.
The mileage rates for 2020 are 57.5 cents for business use of an automobile, 17 cents from medical and 14 cents for charitable work.
Capital Gains tax rates and Dividends
Capital gains are taxed at 0%, and 20%. The 0% rate applies to taxpayers otherwise in the tax bracket of 15% or 20% for regular tax purposes. Taxpayers in the regular tax brackets of 25% or greater have a 20% capital gains tax rate.
Dividends received by an individual shareholder from domestic and qualified foreign corporations generally are taxed at the same rates that apply to capital gains.
Estate and Gift Taxes
The Estate and Gift Tax lifetime exclusion is $11,580,000 for 2020. It will be adjusted for inflation on a yearly basis.
The annual gift tax exclusion is currently $15,000.
The Standard deduction for 2020 increases to $12,400 for single and to $24,800 for married filing jointly
Child Tax Credit
The federal child tax credit is $2,00 per qualifying child under age 17.
Miscellaneous Itemized Deductions
Miscellaneous itemized deductions subject to the 2% disallowance has been suspended for years
through 2025. These deductions may still be deductible for state income tax purposes.
State and Local Taxes (SALT)
State and local taxes are limited to $10,000. Local taxes may still be deductible under state income tax rules.
Entertainment and Meals
No deductions are allowed for membership dues of any club organized for business, pleasure, recreation or other social purposes. Meal and entertainment expenses should be separately classified as business meals continue to be partially deductible.
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