The IRS announced that the 2020 tax season will start on Monday, January 27, 2020. The IRS will begin accepting paper and electronic tax returns that day. The deadline to file 2019 tax returns and pay any tax owed is Wednesday, April 15, 2020.
While the 2020 tax filing season promises to be less confusing than 2019, there are still a number of changes that taxpayers should be aware of.
New, Revised, Updated Tax Form 1040
The IRS released an updated Form 1040. The new Form 1040 is no longer "postcard size" - though it is shorter than it was in 2018, still slightly longer than the 2019 version. A new Form 1040-SR was created and intended for taxpayers age 65 and older.
Health Insurance Mandate Penalty Eliminated
The penalty for failing to obtain health insurance expired at the end of 2018; however, some states (ex. California) still require state residents to maintain minimum essential coverage for themselves and their dependents, or pay a state tax penalty.
Alimony is No Longer Deductible
Alimony is no longer deductible to the payer and is no longer taxable to the payee for separation or divorce agreements or decrees in effect on this date (January 1, 2019) or later.
Virtual Currency (Cryptocurrency)
The IRS started an initiative on virtual currency - according to the IRS, they sent out over 10,000 notices/letters to people that they knew had virtual currency sales but had not reported them on their tax returns. If you engaged in a transaction involving virtual currency, you will need to file Schedule 1. (Please see the instructions for Schedule 1 for more information) If any of the transaction that you invest in on a foreign exchange, you must also report the assets on the related foreign reporting forms.
Other Inflation-related Adjustments
Finally, there are plenty of small tax law changes that reflect the impact of inflation. Among them are the following.
- Standard deductions rose to $12,200 for singles, $24,400 for married couples (joint-filers).
- Tax brackets got wider, reflecting increases of about 2%.
- Exemption amounts for the Alternative Minimum Tax were also increased and indexed for inflation.
