Listed here are changes specific to 2020 taxes. To find a list of changes due to the annual inflation adjustments, see Tax Facts – 2 Year Comparison.
- Medical expense deduction threshold remains at 7.5%. To deduct medical expenses as an itemized deduction, threshold is still 7.5 percent of your Adjusted Gross Income (AGI). The 10 percent threshold was rolled back to 7.5 percent for last year and 2020.
- Retirement account rules get an overhaul. A number of changes were made to retirement plan rules beginning in 2020. Among them are:
- Moving the requirement minimum distribution to age 72 from age 70 1/2.
- Removing the age limit to contribute to traditional IRAs.
- Eliminating the stretch IRA for most non-spouse beneficiaries. Distributions must now be taken out within 10 years.
- Allowing qualified part-time employees to participate in employer retirement plans.
- Allowing new parents to withdraw up to $5,000 penalty-free from qualified retirement accounts to pay for a new birth or adoption.
- Mortgage insurance premium deductions. You may use this premium expense as an itemized deduction once more in 2020.
- Continued revisions to Form W-4 to get your withholds right. The IRS is continuing to revise this important paycheck withholding tool to ensure your taxes do not create a big surprise or underpayment tax penalty.
- Covid 19 payments. Most taxpayers have received stimulus checks to help during the pandemic. If you are eligible for this payment, but have not received it, you can claim it on your tax return.
The changes outlined here are only some of the major changes implemented during the current tax year. As other changes are made, rest assured they will be reflected in any of your tax filings.