Happy New Year from Oldfather Financial!
We wanted to provide everyone a 2020 Quick Reference guide on Contribution Limits and Tax Reference.
This will give you the contribution limits for various retirement accounts (IRA, ROTH, SEP, SIMPLE, 401k, etc…). No big increases in 2020.
On the back is the Federal Tax brackets which were put into place in 2018. They will revert (higher) to the previous tax rates in the year 2025.
Pay attention to your tax bracket and how close you are to the low or high part of the bracket. However, there is not a lot you can do about it since the standard deduction has increased. In the US, we have a marginal tax bracket, so you do not just pay one tax rate on your income. An example is a couple filing jointly that made $90,000. They will pay taxes at a 10% level on the first $19,750 (or $1,975), pay taxes ($7,260) at a 12% rate on the income up to $80,250, and then pay at a 22% rate on the difference between $90,000 and $80,250 ($9,750) for a tax of $472 with a total tax bill of $9,707 (or 11% effective rate….$9,707/$90,000).
If you have any questions, give Bill or I a call. Bring in your 2019 Tax Return when completed and we see if any changes need to be done for 2020.