Tax Tips: Make These Changes Now to Save in 2020
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Here's your Money Briefing. I'm J.R. Whalen at The Wall Street Journal in New York. There are things you can do right now to lower your tax bill next year. Tax reporter Laura Saunders will be with us in a moment to explain. First, some money and market news you should know. The share of out-of-work Americans collecting unemployment benefits is at a historic low, in part because of tighter rules for those who can get them. In the past, most state unemployment programs conducted random checkups to see if unemployment recipients were actively looking for work. But after the last recession ended, some states began requiring benefit recipients to provide proof of their job search on a weekly or biweekly basis.
Last year, only about 30 percent of those without a job received unemployment benefits. The current strong labor market also means that many people quit their jobs voluntarily, which makes them ineligible for benefits in most cases. A top bank regulator wants to change regulations that could boost loans to low-income borrowers.
What end-of-year tax moves should you consider to lower your 2020 tax bill?
Next month, the Office of the Controller of the Currency will propose rules changes to the Community Reinvestment Act. That requires banks to serve borrowers of all income levels who live near their branches. In 2017, banks made $482 billion in such loans, which was about 4% of deposits. Under the proposed rule change, banks would have to ensure that loans aren't only made in areas defined as poorer neighborhoods, but that they go to lower-income borrowers as well. changes to community lending rules would affect about 1,200 banks, including large institutions like JPMorgan Chase and Wells Fargo.
Things get busy for everybody during the holiday season, planning the holidays and travel, wrapping up your work projects. But making the right tax moves now to save you money next year should be near the top of your list. Wall Street Journal tax reporter Laura Saunders is here with some ideas. So, Laura, you know, a lot of times we don't focus on taxes till March or April, but really now's the time to run the numbers.
Absolutely. Now is the time to pay attention because after December 31st, there's very little that you can do to alter your tax bill. It mostly comes down to maybe putting some money in retirement accounts.
And there are a lot of ways you can manage your tax bill. And going over your tax withholding on your pay stub is really a good place to start.
Everybody should check their withholding this year. Check your withholding. Last year, a lot of people got bad refund surprises because they overhauled the tax code. That is, Congress overhauled the tax code. And also, the Treasury Department changed the automatic paycheck withholding. And so people got these bad surprises. Maybe they actually got a tax cut, but it looked like they didn't because they got a lower refund or no refund at all, maybe a surprise tax bill. Because of all the bad surprises last year, the IRS improved its withholding calculator. And so it's much easier to figure it out, and I urge everybody to do that.
And it's also important to figure out whether you should itemize your deductions.
Oh, absolutely. Until the overhaul of 2017, about 30% of taxpayers itemized their deductions on Schedule A. That's where you put in, you save receipts and you put in for your home mortgage interest and your state and local taxes and your charitable contributions and things like that. Now, before the overhaul, about 30% of Americans itemized. Now only about 10% do. Most people don't need to do it at all. And another thing is that you should check your strategy because maybe you almost have enough to itemize with those charitable deductions. Maybe you want to bunch your deductions and make them every two years instead of every year or every three years. So in those years, you can take itemized deductions and the other years you can take the standard deduction.
And for the tax year 2019, when we will be filling out our tax forms in early 2020, the standard deduction has come up?
The standard deduction is $12,200 for singles and $24,400 for married couples filing jointly.
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