Tax Changes for 2019-2020: Coronavirus Effects and Other New Rules

Here's how some of the most influential tax rules have changed and how they might affect you.

Tina OremJune 25, 2020
Never Mind Tax Reform — What's Different When I File This Year?

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This article covers two types of tax changes this year:

  • Tax changes related to the government's ongoing response to the coronavirus.

  • Tax changes related to annual adjustments in tax rules and thresholds that could affect what you can claim and how you file.

Coronavirus-related tax changes

The U.S. government extended the tax-filing deadline to July 15, 2020. That means you now have an extra three months to both file and pay your federal income taxes. Read more here.

If you pay quarterly estimated taxes, the deadline for some payments is now July 15. Learn more here.

If you aren't able to get your tax return done by July 15, 2020, this year, you can get an extension until Oct. 15. Just remember, a tax extension only gives you more time to file. It doesn't give you more time to pay. Learn more here.

The U.S. Treasury will disburse up to $1,200 per adult and $500 per child under age 17. Not everyone qualifies, and when you'll get money depends on a few factors. Learn more here.

The extension of the tax-filing deadline to July 15 gives you until then to contribute to a traditional IRA or HSA for 2019 and possibly get a tax deduction for the 2019 tax year. Learn more here.

The IRS has announced that new automatic, systemic liens and levies will be temporarily suspended between April 1, 2020, and July 15, 2020, as part of the government’s ongoing coronavirus response. For more, see our page about tax liens and our page about tax levies.

The deadline for filing and paying gift taxes and estate taxes is moved to July 15, 2020. Learn more about estate taxes here and gift taxes here.

As part of the government’s ongoing coronavirus response, people who already have installment agreements do not have to make payments due between April 1 and July 15, 2020. The IRS also won’t deem any installment agreements in default during that period, but interest will still accrue on unpaid balances. Learn more.

You have until July 15, 2020 to provide requested additional information to support your application. Also, the IRS won’t close a request before then without your permission. The IRS won’t default an OIC for people who are delinquent in filing their 2018 tax return as long as they file it (and their 2019 return) on or before July 15, 2020. Learn more here.

The IRS will pay interest on tax refunds from tax returns filed by July 15, 2020. The interest begins accruing on April 15, 2020 and ends when the refund is paid to you. You might get a separate check for the interest.. The interest rate for the second quarter of 2020 is 5% per year, compounded daily. The interest rate for the third quarter is 3% per year, compounded daily.

Individuals affected by COVID-19 can withdraw up to $100,000 from employee-sponsored retirement accounts like 401(k)s and 403(b)s, as well as personal retirement accounts, such as traditional individual retirement accounts, or a combination of these. The 10% penalty will be waived for distributions made in 2020. Learn more.

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Each year, the IRS also does some tinkering and adjusting to various tax rules, and knowing what they are could save you a lot of money. Here's what's different for the 2019 tax year, which will affect the tax return you'll file in 2020.

This year's regularly scheduled changes

Tax brackets and tax rates

There are seven federal tax brackets for the 2019 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your bracket depends on your taxable income and filing status. These are the rates for taxes due in July 2020.

2019 federal income tax brackets

(for taxes due in July 2020, or in October 2020 with an extension)

Tax rate

Single

Married, filing jointly

Married, filing separately

Head of household

10%

$0 to $9,700

$0 to $19,400

$0 to $9,700

$0 to $13,850

12%

$9,701 to $39,475

$19,401 to $78,950

$9,701 to $39,475

$13,851 to $52,850

22%

$39,476 to $84,200

$78,951 to $168,400

$39,476 to $84,200

$52,851 to $84,200

24%

$84,201 to $160,725

$168,401 to $321,450

$84,201 to $160,725

$84,201 to $160,700

32%

$160,726 to $204,100

$321,451 to $408,200

$160,726 to $204,100

$160,701 to $204,100

35%

$204,101 to $510,300

$408,201 to $612,350

$204,101 to $306,175

$204,101 to $510,300

37%

$510,301 or more

$612,351 or more

$306,176 or more

$510,301 or more

Expand the filing status that applies to you.

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $9,700

10% of taxable income

12%

$9,701 to $39,475

$970 plus 12% of the amount over $9,700

22%

$39,476 to $84,200

$4,543 plus 22% of the amount over $39,475

24%

$84,201 to $160,725

$14,382.50 plus 24% of the amount over $84,200

32%

$160,726 to $204,100

$32,748.50 plus 32% of the amount over $160,725

35%

$204,101 to $510,300

$46,628.50 plus 35% of the amount over $204,100

37%

$510,301 or more

$153,798.50 plus 37% of the amount over $510,300

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $19,400

10% of taxable income

12%

$19,401 to $78,950

$1,940 plus 12% of the amount over $19,400

22%

$78,951 to $168,400

$9,086 plus 22% of the amount over $78,950

24%

$168,401 to $321,450

$28,765 plus 24% of the amount over $168,400

32%

$321,451 to $408,200

$65,497 plus 32% of the amount over $321,450

35%

$408,201 to $612,350

$93,257 plus 35% of the amount over $408,200

37%

$612,351 or more

$164,709.50 plus 37% of the amount over $612,350

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $9,700

10% of taxable income

12%

$9,701 to $39,475

$970 plus 12% of the amount over $9,700

22%

$39,476 to $84,200

$4,543 plus 22% of the amount over $39,475

24%

$84,201 to $160,725

$14,382.50 plus 24% of the amount over $84,200

32%

$160,726 to $204,100

$32,748.50 plus 32% of the amount over $160,725

35%

$204,101 to $306,175

$46,628.50 plus 35% of the amount over $204,100

37%

$306,176 or more

$82,354.75 plus 37% of the amount over $306,175

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $13,850

10% of taxable income

12%

$13,851 to $52,850

$1,385 plus 12% of the amount over $13,850

22%

$52,851 to $84,200

$6,065 plus 22% of the amount over $52,850

24%

$84,201 to $160,700

$12,962 plus 24% of the amount over $84,200

32%

$160,701 to $204,100

$31,322 plus 32% of the amount over $160,700

35%

$204,101 to $510,300

$45,210 plus 35% of the amount over $204,100

37%

$510,301 or more

$152,380 plus 37% of the amount over $510,300

Standard deduction

The standard deduction reduces your taxable income. For the 2019 tax year (that's the tax return you'll file in 2020), the standard deduction is $12,200 for single filers and married filers filing separately, $24,400 for married filers filing jointly and $18,350 for heads of household. (Go here for help deciding whether to itemize or take the standard deduction.)

Filing status

2020 tax year

2021 tax year

Single

$12,400

$12,550

Married, filing jointly

$24,800

$25,100

Married, filing separately

$12,400

$12,550

Head of household

$18,650

$18,800

The standard deduction is $1,300 higher for those who are over 65 or blind; it's $1,650 higher if also unmarried and not a surviving spouse.

Personal exemption

There are no personal exemptions in the 2019 tax year.

Retirement plan contribution and income limits

Contributing to an IRA can cut your tax bill significantly.

Traditional IRA income limits for the 2019 and 2020 tax years

Note: Traditional IRA income limits apply only if you (or your spouse) have a retirement account at work.

Filing status

2020 MAGI

2021 MAGI

Deduction

Single or head of household

$65,000 or less

$66,000 or less

Full deduction

More than $65,000 but less than $75,000

More than $66,000 but less than $76,000

Partial deduction

$75,000 or more

$76,000 or more

No deduction

Married filing jointly

$104,000 or less

$105,000 or less

Full deduction

More than $104,000 but less than $124,000

More than $105,000 but less than $125,000

Partial deduction

$124,000 or more

$125,000 or more

No deduction

Married filing jointly (spouse covered by retirement plan at work)

$196,000 or less

$198,000 or less

Full deduction

More than $196,000 but less than $206,000

More than $198,000 but less than $208,000

Partial deduction

$206,000 or more

$208,000 or more

No deduction

Married filing separately (you or spouse covered by retirement plan at work)

Less than $10,000

Less than $10,000

Partial deduction

$10,000 or more

$10,000 or more

No deduction

Roth IRA income limits for the 2019 and 2020 tax years

Filing status

2020 MAGI

2021 MAGI

Maximum annual contribution

Single, head of household or married filing separately (if you didn't live with spouse during year)

Less than $124,000

Less than $125,000

$6,000 ($7,000 if 50 or older)

$124,000 up to $139,000

$125,000 up to $140,000

Contribution is reduced

$139,000 or more

$140,000 or more

No contribution allowed

Married filing jointly or qualifying widow(er)

Less than $196,000

Less than $198,000

$6,000 ($7,000 if 50 or older)

$196,000 up to $206,000

$198,000 up to $208,000

Contribution is reduced

$206,000 or more

$208,000 or more

No contribution allowed

Married filing separately (if you lived with spouse at any time during year)

Less than $10,000

Less than $10,000

Contribution is reduced

$10,000 or more

$10,000 or more

No contribution allowed

Student loan interest deduction

The student loan interest deduction lets you deduct up to $2,500 from your taxable income if you paid interest on student loans in 2019. If you fall into the 22% tax bracket, for example, the maximum student loan interest deduction would put $550 back in your pocket.

Student loan interest is deductible if your modified adjusted gross income, or MAGI, was less than $70,000 in the past tax year. The maximum deduction is $2,500. If your MAGI was between $70,000 and $85,000, you can deduct a reduced amount of interest that you paid.

Earned Income Tax Credit

The Earned Income Tax Credit (EIC or EITC) is a refundable tax credit for low- and moderate-income workers. The amount depends on income and number of children. People without kids can qualify. For the 2019 tax year, the earned income credit ranges from $529 to $6,557. For 2020, it’s $538 to $6,660 (go here for more on how it works).

2019 Earned Income Tax Credit

(for taxes due in July 2020)

Number of children

Maximum earned income tax credit

Max earnings, single or head of household filers

Max earnings, joint filers

0

$529

$15,570

$21,370

1

$3,526

$41,094

$46,884

2

$5,828

$46,703

$52,493

3 or more

$6,557

$50,162

$55,952

  • Both your earned income and your adjusted gross income each have to be below the levels in the table.

  • In general, the less you earn, the larger the earned income credit.

  • Your earned income usually includes job wages, salary, tips and other taxable pay you get from your employer. Your adjusted gross income is your earned income minus certain deductions.

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