Tax Numbers You Must Know This Year

It is always good to be prudent by reviewing your tax plans for the year. Especially at the beginning of one as amounts tend to be adjusted for inflation.

Though the Social Security Administration and Internal Revenue Service post what these new numbers will be during the fall of the previous year, the first month of January is the time when you need to keep an eye out for these changes.

The following information is in regards to estimating taxes, paycheck withholding, and savings for retirement.

The first number you should know is that the Social Security Wage Base tax is 6.2 percent. Those that make $137,700 or below will have to pay this amount if Social Security covers their job. Those that makeover this amount are not liable to this tax. The max SS withholding this year will be $8,537.40.

Below are 2020’s income-tax brackets and withholding rates. It will provide information on whether the amount of money being withheld for taxes will take care of the taxes you will owe this year.

Tax rate of 10 percent will be for those single filers or married filers that are doing so separately that make $9,875 or less annually, and for those that are filing jointly or are a qualifying widow will have an income of $19,750 or less.

Tax rate of 12 percent is for those single filers or married filers that are doing so separately that make $9,701 to $39,475 annually, and for those filing jointly or are a qualifying widow will have an income of $19,401 to $78,950.

Tax rate of 22 percent is for those single filers or married filers that are doing so separately that make $39,476 to $84,200 annually, and for those filing jointly or are a qualifying widow will have an income of $78,951 to $168,400.

Tax rate of 24 percent is for those single filers or married filers that are doing so separately that make $84,201 to $160,725 annually, and for those filing jointly or are a qualifying widow will have an income of $168,401 to $321,450.

Tax rate of 32 percent is for those single filers or married filers that are doing so separately that make $160,727 to $204,100 annually, and for those filing jointly or are a qualifying widow will have an income of $321,451 to $408,200.

Tax rate of 35 percent is for those single filers or married filers that are doing so separately that make $204,101 to $510,300 annually, and for those filing jointly or are a qualifying widow will have an income of $408,201 to $612,350.

Tax rate of 37 percent is for those single filers or married filers that are doing so separately that make $510,301 or more annually, and for those filing jointly or are a qualifying widow will have an income of $612,351 or more.

For individuals that receive additional money, such as a bonus, this will be calculated as your supplemental wage income. There is a flat tax rate of 22 percent on this type of income that is below $1 million or under. The rate is 37 percent for those that receive over $1 million.

If your tax bracket rate does not cover the 22 percent rate, it is recommended you put money aside to cover your supplemental income tax or adjust your withholding rate to cover this tax as well.

The maximum contribution limit for many retirement plans such as a 401(k) or Thrift Savings Plan has been increased by $500 to $19,500.

The max amount that can be tax-deferred to qualifying contribution plans was increased by $1,000 to $57,000 this year.

Those that are 50 or older will have an additional $6,500 increase with catch-up contributions.

For this year, $285,000 is the max amount of income that can be put calculated for qualified deferrals.

If you wish to defer more money, you may wish to see if your workplace has a nonqualified deferred compensation plan to see if you can do so.

Tax Refund

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