Keeping up with the Ever-Changing Numbers for Planning
Day-in and day-out I help the advisors and clients of BCR Wealth on the execution in their accounts. For me, the IRS limits are an important part of what I do.
It’s a new year, which means tax season is upon us. If you are trying to maximize your financial benefits it is important that you and/or your trusted advisors keep up with the annually changing limits. As you prepare 2019 taxes and plan 2020 it is worth noting the IRS has updated some of its contribution and gifting limits for 2020.
Keep in mind the IRS does have guidelines and limits based on your income, tax-filing status, and other factors.
- For 2020, the IRA contribution limit will stay at $6,000 for both traditional and Roth contributions. If you’re age 50 or older, you can contribute an additional $1,000 as a catch-up contribution.
- For your retirement plan through your employer, the contribution limit is increasing to $19,500 from $19,000 in 2019. Catch-up contributions are also permitted if you’re age 50 or older, up to $6,500 from $6,000 last year.
- If you’re self-employed or can make after-tax contributions through your employer, your overall contribution limit is increasing from $56,000 to $57,000.
- For working Americans, tax bracket thresholds are increasing slightly from the 10% bracket up to the 37% bracket.
- The standard deduction is increasing to $12,400 for single and $24,800 for married filing jointly
- Gifting – Individuals will be able to gift or exclude from federal estate taxes a total of $11.58 million (up from $11.4 million in 2019)
- $15,000 is the maximum throughout the year you can give to any one person without reporting a gift