Simple changes to 401(k) contributions as well as adjusted tax brackets announced by the IRS may help Americans hold on to more of their money and save for retirement.
Time to pick your brackets. Not for your March Madness office pool, but for April 15th when 2019 federal taxes are due to be filed.
Geltrude told Yahoo Finance’s On the Move that 2017’s tax reform legislation successfully simplified the tax code. “A lot of people really lost their deductions. Now they made up for it with the standard deduction because that became much higher than it was,” he said. IRS Changes for 2020The IRS raised the cap on 401 contributions $500 to $19,500. People 50 and older can contribute an additional $6500 as part of their catch-up contributions. That’s also $500 more than last year. One incentive to save is that traditional pre-tax contributions to a 401 can reduce your adjusted gross income or taxable income.The IRS released its inflation adjusted personal tax brackets for 2020 at the end of last year.
Tax RefundsThe IRS issued 111,596,000 refunds in 2019. That was about 300,000 fewer than it issued in 2018. The average refund check in 2019 was $2,860, down slightly from the average $2,899 refunded in 2018. Geltrude says taxpayers were a bit confused last year because it was the first time they filed under the new tax reform guidelines.
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