Personal income tax code revisions for 2020

Two years ago, 

Congress passed 

tax reform in late

December 2017… 

and the new tax code

went into effect 

only a few days later.

Taxpayers 

had no time 

to understand 

the new tax law, 

or plan around it.

Well, they did it again !

Last minute tax code

revisions enacted

December 2019:

IRAs:

A 643-page spending bill 

changed the SECURE Act, 

intended to ‘help’ Americans 

save for retirement. 

They removed the age limit 

for contributing to an IRA, 

which had been 70 ½.

They increased the age 

for Required Minimum 

Distributions to age 72, 

up from age 70 ½. 

Under the old laws, 

your IRA could be 

bequeathed to your heirs 

when you pass away

 -- and they had the option 

of taking IRA distributions 

over a long time period.

Now, almost all inherited IRAs 

must be fully distributed 

within 10-years, whether 

your heirs need the money or not.

( Note: 

Transferring your IRA 

to a special type of trust 

called a charitable remainder 

uni-trust could still ensure 

that your heirs receive lifelong 

favorable tax treatment 

on an inherited IRA. )

Millions of Americans 

are paying more taxes

in 2020 because of 

the lack of an 

inflation adjustment, 

which is often 
intentional, 

and nothing new.

Some examples:

State and Local Tax Write-offs: 

Lawmakers capped write-offs 

for state and local 

property taxes, and 

income or sales taxes

       ( aka "SALT" ), 

at $10,000 per return, 

with no inflation adjustment.

Profit on a Sale of a Home: 

An exemption of up to $500,000

 per married couple of profit 

on the sale of a house 

( $250,000 for single filers ) 

was enacted in 1997, 

but is not inflation adjusted.

Social Security: 

The income 

thresholds 

for including 

Social Security 

payments in 

taxable income 

were enacted in the 

1980s and 1990s. 

Filers must report 

85% of SS payments 

on their tax return 

-- Above $44,000 

for married couples, 

            and 

$34,000 for singles, 

since 1994. 

If adjusted for inflation, 

the $44,000 and $34,000 

would be about 

$77,000 for couples, and 

$60,000 for singles, 

in 2020 dollars.

Capital Losses: 

Since 1978, the tax code 

allowed investors to deduct 

only $3,000 of net long-term 

investment losses 

against ordinary income, 

such as wages. 

If adjusted for inflation, 

that deduction would be 

more than $12,000, 

in 2020 dollars.