The IRS today released an advance version of Rev. Proc. 2019-44 providing the annual inflation adjustments for more than 60 tax provisions to be used by individual taxpayers on their 2020 returns (that is, the returns that are generally filed in 2021).
The tax law change covered in Rev. Proc. 2019-44 was added by the Taxpayer First Act of 2019, which increased the failure to file penalty to $330 (up from $205) for returns not filed within 60 days of their due date (determined with regard to any extensions of time for filing). The increased penalty amount of $330 applies to returns due after the end of 2019, and the amount will be adjusted for inflation beginning with tax year 2021.
As such, the failure to file penalty for returns due after December 31, 2019, that are not filed within 60 days of their due date will not be less than the lesser of: (1) $330 (amount will be adjusted for inflation beginning with tax year 2021); or (2) 100% of the amount required to be shown as tax on such returns.
With the inflation adjustment, Rev. Proc. 2019-44 provides that for tax year 2020:
The standard deduction amounts for 2020 will be increased, as follows:
The personal exemption for tax year 2020 remains at $0 (the personal exemption was suspended for tax years 2018 through 2025 by the U.S. tax law enacted in 2017 (the law that is often referred to as the “Tax Cuts and Jobs Act” or TCJA).
For 2020, there is no limitation on overall itemized deductions (referred to as the “Pease” limitation under prior law) because that limitation was also suspended by the TCJA for years 2018-2025.
*For 2019, the AMT exemption amount was $71,700 and began to phase out at $510,300 ($111,700 for married couples filing jointly and began to phase out at $1,020,600).
The IRS today also released a notice providing cost of living adjustments and dollar limitations for qualified retirement plans for tax year 2020. Read TaxNewsFlash
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