These Tax Items Could Change In A Few Months

Jul 15, 2020 | Tax

Karl Eggerss was on CBS discussing 5 tax changes in 2020 that may not be around in 2021.

Sharon Ko:                         There are new tax provisions in the age of coronavirus. Tonight, we are taking a look at the five changes in place for 2020 that may not be here for 2021.

Financial advisor Karl Eggerss breaks it down for us. Number one, charitable contributions.

Karl Eggerss:                      With the tax changes a couple years ago, many people use the standard deduction, so a lot of their charitable contributions are not deductible. In 2020, even if you use the standard deduction, you can still deduct up to $300 of a gift to charity.

Sharon Ko:                         Next up, student loans.

Karl Eggerss:                      So after March 27th of this year, all the way through the end of the year, if an employer pays an employee’s student loans up to $5,250, it is not going to be counted as compensation to the employee. In the past, it was.

Sharon Ko:                         The third one affects your 401(k).

Karl Eggerss:                      If you were impacted by COVID financially, you can withdraw up to $100,000 out of your 401(k), and you don’t have to repay it for up to three years.

Sharon Ko:                         The fourth, your individual retirement account.

Karl Eggerss:                      If you’re over the age of 72 and you were taking out required minimum distributions from your IRA, which is required each and every year by the IRS, you do not have to do that in 2020. That also applies to people that have inherited an IRA as well.

Sharon Ko:                         If you’re a business owner, number five is for you.

Karl Eggerss:                      Business interest was deductible, but only up to a certain amount. That has been increased this year, so even small business owners get some benefits.

 

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