We Avoided The Fiscal Cliff…What This Means For Your Taxes
So apparently we narrowly missed going over the fiscal cliff this year and there were a few patches that should help everyone keep more money in their pockets and pay less in taxes in 2020.
Here are just some of the patches or fixes that were announced:
-Alternative Minimum Tax
-Tuition and fees deduction
-Reduction in income taxes
There were a few more things that were mentioned but I just wanted to highlight these as they pertain to the majority of my readers here.
The Alternative Minimum tax was patched to affect only those with an income of over $75 thousand, who are married and have more than two children. That means the folks like me who make (way) under $75 thousand will not get hit and have to pay under this tax.
The educator deductions will still be in place, allowing teachers to deduct $250 of supplies that they buy with their own money. I was able to take this deduction while I was a full time teacher but sadly I cannot take it again because I am now a student.
Tuition and fees deduction allows you to deduct up to $4000 for college students. This includes not only tuition paid but also part of books and fees so it is a great help for all those who can actually take the deduction.
One of the biggest things is that the tax rates for the new year have been settled and they affect the majority of tax payers. The tax rates for singles with incomes below $400 thousand will remain at 10%, 25%, 28%, and 33% and will go to 39.6% for the highest income earners.
To find out more about all the changes that were made to the tax laws for the upcoming filing season you can consult your accountant or just check out your tax filing software. Most of them have already been updated to reflect the changes and should be ready to accept your information in a few weeks as we begin to prepare those long and complicated forms.