Happy new year
from LWH CPAs!
2020 marks a new
year and many tax law changes have occurred that we believe may have a direct
impact on you. Such changes include:
RETIREMENT
·
Effective 2020: no age limit on contributions to an IRA if
you have earned income (previously prohibited after turning 70 ½).
·
Effective 2020: mandatory age to begin distributions from an
IRA now 72 (up from 70 ½).
·
IRAs inherited from people (other
than your spouse and a few other exceptions) who passed away after 2019 must
now be distributed within 10 years of death.
·
Stipends and fellowship now
qualify the recipient to make IRA contributions.
·
Up to $5,000 may be withdrawn
from a retirement plan without penalty for the birth or legal adoption of a
child, for up to one year after birth or adoption. Note that the amount withdrawn is still
taxable, but may be redeposited without penalty, and if redeposited within 60
days of withdrawal is not even taxable.
COLLEGE/CHILDREN
·
You may now withdraw up to
$10,000 total during your lifetime from a 529 plan to repay student loans of
the account beneficiary (or siblings) without tax or penalty.
·
Children are once again
retroactively taxed at their parent’s tax rates instead of the potentially
higher trust tax rates.
·
The tuition and fees deduction
has been retroactively restored for 2018-2020.
·
A 529 can be used tax free to pay
for an apprenticeship program if it is approved as such.
OTHER
·
The deduction for mortgage
insurance premiums has been retroactively restored.
·
The deduction for medical
expenses has been restored to a lower threshold.
·
The credit for installing an
electric car charger has been restored.
These are just
some of the year-end tax law changes that may impact your tax situation. Please
contact
us for specific information on how these new
tax law changes may impact you.