January 2020 Tax Tips

January 2020 Tax Tips

This month:

January 1

- New Year's Day

January 15

- 4th Quarter Estimated Payments Due

January 20

- Martin Luther King Jr. Day

Start tax planning for the new year

- Adjust withholdings

- Organize filing records

- Schedule tax consultation

- Rebalance investment portfolio

Welcome 2020. A new year calls for a fresh look at your financial strategies. Consider making the most of your savings accounts — and don't forget you still have time to fund your IRA!

Call if you would like to discuss how this information relates to you. If you know someone who can benefit from this newsletter, feel free to send it to them.

There's Still Time to Fund Your IRA

There is still time to make a contribution to a traditional IRA or Roth IRA for the 2019 tax year. The annual contribution limit is $6,000 or $7,000 if you are age 50 or over.

Prior to making a contribution, if you (or your spouse) are an active participant in an employer's qualified retirement plan (a 401(k), for example), you will need to make sure your modified adjusted gross income (MAGI) does not exceed certain thresholds. There are also income limits to qualify to make Roth IRA contributions.

Maximum 2019 IRA Contribution amounts: $6,000 or $7,000 (with age 50+ catch-up provision)

2019 IRA Income (MAGI) Limits





Traditional IRA
allowed contribution range

Roth IRA
allowed contribution range

Filing Status

Full
Contribution

Phaseout
Complete

Full
Contribution

Phaseout
Complete

Single

$64,000

$74,000

$122,000

$137,000

Married

$103,000
(both participating)

$193,000
(nonparticipating spouse)

$123,000
(both participating)

$203,000
(nonparticipating spouse)

$193,000

$203,000



Note: Married traditional IRA limits depend on whether either you, your spouse or both of you participate in a qualified employer-provided retirement plan. If married filing separate and either spouse participates in an employer's qualified plan, the income phaseout to contribute is $0-10,000.

If your income is too high to take advantage of these IRAs you can always make a non-deductible contribution to an IRA. While the contributions are not tax-deferred, the earnings are not taxed until they are withdrawn.

2020 Retirement Plan Limits

As part of your 2020 planning, now is the time to review funding your retirement accounts. By establishing your contribution goals at the beginning of each year, the financial impact of saving for your future should be more manageable. Here are annual contribution limits:

Retirement Plans

2019

2020

Change

Age 50 or older
catch up

IRA: Traditional

$6,000

$6,000

none

add: $1,000

IRA: Roth

$6,000

$6,000

none

add: $1,000

IRA: SIMPLE

$13,000

$13,500

+$500

add: $3,000

401(k), 403(b), 457 plans

$19,000

$19,500

+$500

add: $6,500



Take action

If you have not already done so, please consider:

  • Reviewing and adjusting your periodic contributions to your retirement savings accounts to take full advantage of the tax advantaged limits

  • Setting up new accounts for a spouse or dependent(s)

  • Using this time to review the status of your retirement plan

  • Reviewing contributions to other tax-advantaged plans including flexible spending accounts and health savings accounts

As always, should you have any questions or concerns regarding your tax situation please feel free to call.


This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here. This publication includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this newsletter. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does JOHN P WAUTERS & COMPANY LLC have any control over, or responsibility for, the content of any such Websites. All rights reserved.