There were a number of tax changes due to the Coronavirus that may impact your tax returns this year. Tax laws specific to retirement accounts were implemented or changed to help people through the pandemic, and tax planning helps people reap the benefits of these changes. That’s why a Sarasota tax planning filing solution attorney will help you decide the best way to handle retirement accounts right now.
In this article, we will discuss some of those tax changes that may impact you as tax day approaches. At the Law Office of Mary E. King, P.L. we can make sure that your tax planning and other issues are resolved efficiently and at the lowest cost to you. Please fill out our online contact form, or call us at 941-906-7585 today.
1. Increased Contribution Limits for Retirement Plans
You are limited to a certain dollar amount when contributing to employer retirement plans. They raised this amount for the 2020 and 2021 tax years to $19,500, from the $19,000 limit in 2019. This applies to the federal government Thrift Savings Plan, 401(k)s, 403(b)s, as well as many 457 plans. You can also contribute more to SIMPLE plans for 2020 and 2021. In addition, if you are 50 or older, they increased the catch-up limit from $6,000 to $6,500 for 2020 and 2021.
Overall, these changes may help your current year’s taxes and future financial stability and savings. In order to see what you can do and what you qualify for, with the best tax savings, call a Sarasota tax planning filing solution attorney today.
2. Waived Required Minimum Distributions
Normally anyone who is 70½ or older is required to withdraw a minimum amount each year from certain types of employer retirement plans. This keeps people from using retirement plans as a way to avoid paying taxes.
In 2020, the federal government increased the age of people falling under the minimum retirement distribution requirement from 70½ to 72. And as part of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act), the government waived the minimum amount that people age 72 and older have to withdraw from these retirement accounts. People that have already taken the required minimum distribution amount have 60 days to roll it back into the plan to avoid paying taxes on it.
This change means that many people will get a tax break for this year because they don’t have to withdraw a minimum, thereby lowering their income for the year and maybe the amount owed in taxes this year.
3. Saver’s Credit
Some people may not be aware that there is something called a Saver’s Credit (previously named the Retirement Savings Contributions Credit). The Saver’s Credit allows people to take a deduction for a percentage of amounts invested in certain retirement plans. There are income limitations for taking this credit. The good news is that they increased the income limits for 2020, allowing more people to qualify for this credit. The Saver’s credit takes many factors into account which a Sarasota tax planning filing solution attorney will consider when helping you with your taxes.
4. Taxes on Early Withdrawals from Retirement Accounts
The CARES Act took into account that some people would be adversely affected by the pandemic by losing their job, being furloughed, or getting the virus. Accordingly, the government included a section in the Act to allow qualifying people to withdraw money from certain retirement accounts. Qualifying people can withdraw up to $100,000 from their retirement account without incurring the 10% early withdrawal penalty normally associated with such a withdrawal for people under 59½.
In addition, if you pay the amount back to the retirement plan within three years, there won’t be any tax consequences, and it will be treated as a tax-free rollover. If you don’t plan to pay it back, the amount taken out of the plan can be divided up over three years of taxable income.
Having a tax preparation attorney in Sarasota at your side to advise you, and to give you options for your tax returns this year is necessary.
Consider Reaching Out To The Law Offices Of Mary E. King For Help.
Tax matters can be complicated, and thus, it is always helpful to have someone in your corner who understands the tax law and deals with the IRS on a regular basis. Indeed, beyond just the retirement law changes, there could be other issues with which a seasoned tax attorney can help.
So, when it comes to dealing with tax relief and tax litigation, you need to talk to a Sarasota tax planning attorney who can help. Mary E. King has spent her career concentrating in tax law and can help you in Florida and elsewhere. Attorney King has a wealth of information about what types of options would make the most sense for you and your business.
That helps explain why she’s received an A+ rating from the Florida Better Business Bureau. If you have a tax-related issue – no matter how small or how large – setting up an initial consultation with Mary E. King, tax lawyer of Florida, is the first step you should take towards relief.
The Law Office of Mary King P.L. offers complete IRS problem-solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses. Call us today to schedule an initial consultation. With years of experience as a tax lawyer in Sarasota for many clients, Attorney Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585. Remember, at the Law Office of Mary E. King, we are focused on solving your tax issues for good.
The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.