Most folks would simply like to jettison 2020 from their memory banks, given the pandemic, the acrimonious political season, and the tumult in the economy. Unfortunately, you can’t, unless you are not required to file taxes. For the rest of us, though, the 2020 tax season is here, even though we are well into 2021.
This year, your filing is due Thursday, April 15. As usual, there have been changes in the tax code. You will need to be aware of these or use an accounting services Walnut Creek CA.
Tax Brackets and Rates for 2020
Your tax rate is a function of the tax bracket into which you fall. These brackets are based on the sum of your various streams of income. For the 2020 tax year, the rates remain the same as for the tax year 2019. There are changes, however, in the actual brackets themselves: The IRS tax code still provides for 7 marginal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%). However, their dollar boundaries were adjusted upward for inflation.
Keep in mind that going forward, the brackets and rates may change again. President Biden campaigned on a promise to raise taxes for many of us.
Standard Deduction for 2020
There is good news on this front! This year, the standard deduction for the tax year 2020 is higher than last time. Single taxpayers are entitled to a $12,400 standard deduction. For married tax filers, the standard deduction is increased to $24,800.
For many taxpayers, it may be beneficial to itemize deductions. If you care to do so, you may be able to significantly lower your tax burden. It pays to work with a professional to ferret out all the itemized deductions you qualify for because many are easily missed by do-it-yourself filers.