Big Income, Big Taxes

Big Income, Big Taxes

The IRS issued a final ruling explaining how to qualify for a real estate income safe harbor to receive the Qualified Business Income (QBI) deduction. You will need to make this safe harbor determination annually.

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The alternative minimum tax (AMT), will see its exemption amount rise in 2020 to $72,900 and begin to phase out at $518,400 ($113,400 for married couples filing jointly and phasing out starting at $1,036,800). In 2019, the exemption was $71,700 and began to phase out at $510,300 ($111,700 for married couples and phasing out starting at $1,020,600). Also in 2020, you’ll pay Social Security tax on up to $137,700 of taxable income, up from $132,900.

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Another provision, the federal estate tax, will be your heirs’ concern after you pass. The basic exclusion amount in 2020 is $11,580,000 per taxpayer (double if filing taxes jointly), after which estate taxes begin. That’s up slightly from 2019, when the exemption was $11,400,000.


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