Tax Rates

2020 Tax Rates – Single Taxpayers – Standard Deduction $12,400 2019 Rates
10% 0 to $9,875
12% $9,875 to $40,125
22% $40,125 to $85,525
24% $85,525 to $163,300
32% $163,300 to $207,350
35% $207,350 to $518,400
37% Over $518,400
2020 Tax Rates – Married Jointly & Surviving Spouses – Standard Deduction $24,800
10% 0 to $19,750
12% $19,750 to $80,250
22% $80,250 to $171,050
24% $171,050 to $326,600
32% $326,600 to $414,700
35% $414,700 to $622,050
37% Over $622,050
2020 Tax Rates – Married Filing Separately – Standard Deduction $12,400
10% 0 to $9,875
12% $9,875 to $40,125
22% $40,125 to $85,525
24% $85,525 to $163,300
32% $163,300 to $207,350
35% $207,350 to $311,025
37% Over $311,025
2020 Tax Rates – Estates & Trusts
10% 0 to $2,600
12% $2,600 to $9,450
35% $9,450 to $12,950
37% Over $12,950
Social Security 2020 Tax Rates
Social Security Tax Rate: Employers 6.2%
Social Security Tax Rate: Employees 6.2%
Social Security Tax Rate: Self-Employed 15.3%
Maximum Taxable Earnings $137,700
Medicare Base Salary Unlimited
Medicare Tax Rate: Employers 1.45%
Medicare Tax Rate: Employees 1.45%
Additional Medicare Tax for income above $200,000 (single filers) or $250,000 (joint filers) 0.9%
Medicare tax on net investment income ($200,000 single filers, $250,000 joint filers) 3.8%
Miscellaneous 2020 Tax Rates
Business expensing limit: Cap on equipment purchases $2,590,000
Business expensing limit: New and Used Equipment and Software $1,040,000
Qualified Business Income threshold amount: $163,300 (single and head of household); $326,600 (married filing joint return)
Qualified Small Employer Health Reimbursement Arrangement limit: $5,250 (single coverage); $10,450 (family coverage)
Prior-year safe harbor for estimated taxes of higher-income 110% of your 2019 tax liability
Standard mileage rate for business driving 57.5 cents
Standard mileage rate for medical driving 17 cents
Standard mileage rate for moving driving -Members of the Armed Forces on active duty who move because of a permanent change of station 17 cents
Standard mileage rate for charitable driving 14 cents
Child Tax Credit $2,000
Unearned income maximum for children under 19 before kiddie tax applies $1,100
Maximum capital gains tax rate for taxpayers with income up to $40,000 for single filers, $80,000 for married filing jointly 0%
Maximum capital gains tax rate for taxpayers with income above $40,000 for single filers, $80,000 for married filing jointly 15%
Maximum capital gains tax rate for taxpayers with income above $441,450 for single filers, $496,600 for married filing jointly 20%
Capital gains tax rate for unrecaptured Sec. 1250 gains 25%
Capital gains tax rate on collectibles 28%
Maximum contribution for Traditional/Roth IRA $6,000 if under age 50 $7,000 if 50 or older
Maximum employee contribution to SIMPLE IRA $13,500 if under age 50 $16,500 if 50 or older
Maximum Contribution to SEP IRA 25% of eligible compensation up to $57,000
401(k) maximum employee contribution limit $19,500 if under age 50 $26,000 if 50 or older
Estate tax exemption $11,580,00
Annual Exclusion for Gifts $15,000
Education 2020 Tax Rates
American Opportunity Credit (Hope) $2,500
Lifetime Learning Credit $2,000
Student Loan Interest Deduction $2,500
Coverdell Education Savings Contribution $2,000
Source: IRS Revenue Procedure 2019-44
Standard Meal Rates for Family Child Care Providers for 2020 income tax returns Continental U.S. 2019-20 Tax Rates (July 1, 2019-June 30, 2020)
For each breakfast $1.33
For each lunch or supper $2.49
For each snack (up to 3 per day for each child) $0.74
Alaska 2019-20 Tax Rates (July 1, 2019-June 30, 2020)
For each breakfast $2.12
For each lunch or supper $4.04
For each snack (up to 3 per day for each child) $1.20
Hawaii 2019-20 Tax Rates (July 1, 2019-June 30, 2020)
For each breakfast $1.54
For each lunch or supper $2.92
For each snack (up to 3 per day for each child) $0.87
Source: Federal Register

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frequently asked questions

  • What Is A Virtual CFO & How Can It Transform My Business?
    • a. A Virtual CFO can be a much-needed sounding board, coach, and guide. Outsourced Virtual CFO is generally not just one person, but an experienced team of professionals providing a full-stack Accounting and Finance Department at a fraction of the cost that it would otherwise cost a business to hire even just one full-time CFO internally. The right virtual CFO service team, such as the one at Perpetual CPA, can deliver timely, detailed, comprehensive financial reporting, interpret the financial data, prioritize recommendations, give expert guidance on how to execute those recommendations, and ultimately give a better path to business success.
  • How can a Virtual Accounting Department help small businesses scale and grow?
    • a. A growing number of small businesses are opting to outsource services such as IT, human resources, or accounting. The benefit of a Virtual Accounting Department is that the company can reduce or increase services to accommodate current business needs. Because the service provider has multiple clients they can absorb fluctuations in workflow more easily than the average small/medium business can on its own.

      b. A Virtual Accounting Department can integrate with a company’s own accounting department to create a blended solution or provide a full-stack accounting department, including Accounting Staff, Manager, Controller, and Virtual CFO. By using a Virtual Accounting Department Small business owners don’t have to worry about hiring, training, figuring out compensation, and payroll compliance for the internal accounting team. Also as the business grows and new and more complex accounting and tax issues come up, the outsourced Virtual Accounting Department can provide all the needed expertise to facilitate continued business success.
  • What are the benefits of hiring a CPA firm?
    • a. Certified Public Accountants (CPAs) do a lot more than just crunch numbers and prepare taxes. They provide valuable expertise and strategies to help businesses and individuals achieve their business and financial goals. A CPA firm can help small businesses with management financial reporting, tax compliance, strategic business advice, and much more. Firms like Perpetual CPA, that specialize in helping small and medium-sized businesses achieve growth, can also provide Virtual CFO services, that help the business owners have the foresight into the short-term future cashflows and be able to more successfully navigate their business performance.
  • What are the best strategies for small business growth?
    • a. A business growth strategy is, simply, a plan of how a business gets from where it is today to where it wants to be in the future.

      b. Some of the questions to consider when coming up with a growth strategy are:
      i. Where will the business get new customers from?
      ii. How will the business expand into new markets?
      iii. What new products could the business offer?

      c. In reality, what happens with many small businesses, is that they generally achieve a specific level of business activity or sales and then the business growth trend flattens. In those cases, working with a firm like Perpetual CPA, which provides Virtual CFO services, can help small businesses avoid stagnation. Virtual CFO services, aside from providing timely accounting and tax reporting, can also provide valuable insight into the current performance of the business, as well as, foresight into the future cash flows for the business. Perpetual CPA Virtual CFO team helps small businesses interpret their financial information and come up with business strategies to help improve business performance and achieve growth.
  • What are the best strategies for small business risk management?
    • a. A risk management plan helps a business develop a detailed strategy to deal with certain risks that are particularly important for the businesses’ success.

      b. For many small and medium-sized businesses, the easiest way to develop and implement a business risk management plan is to work with a reputable CPA firm, such as Perpetual CPA. Large corporations invest a lot of resources and time into managing risk, which is a material factor that allows those large corporations to continue to generate billions of dollars in revenue every year. Small businesses, however, almost never manage any business risks, which is the major reason that over half of all the small businesses do not survive for more than 5 years. Generally, small business owners are not experienced corporate business professionals and lack the needed business knowledge, yet they often have to wear many hats while trying to get their businesses off the ground. In those situations, a CPA firm such as Perpetual CPA, can help small businesses better manage tax compliance risks, cash flow, internal controls, business administration, financial reporting, and much more.
  • What is Strategic Advisory and Virtual CFO? / How do Strategic Advisory and Virtual CFO services work?
    • a. When small businesses start spinning wheels, it is a good time to consider hiring a reputable CPA firm, such as Perpetual CPA, which can provide both Strategic Advice and Virtual CFO services.

      b. As a strategic advisor, the CPA firm will work with business management to improve the effectiveness and profitability of the business. They will look holistically at the business and find ways to operate the business more efficiently, increase customers through additional or improved marketing or improve customer touchpoints and service.

      c. As a Virtual CFO, the CPA firm is like a part-time version of a traditional CFO or Chief Financial Officer plus a full Accounting support team. They perform the tasks that in a larger organization would be performed by the CFO, Controller, and Accounting Staff such as preparing and overseeing the budget process, identifying and analyzing current and future trends, and developing strategies for the business growth.
  • How can timely financial visibility and management reporting help with better business decisions and growth?
    • a. A simple way to a successful business is to prioritize the timely financial visibility and management reporting as it means:
      i. Timely financial information and analysis are essential for making informed decisions, evaluating your company’s results, improving financial performance, and ensuring you are on the path to meet your strategic goals.
      ii. Management reporting is a source of business intelligence that helps business leaders make more accurate, data-driven decisions. But, these reports are most useful if they are available timely and the management receives proper interpretation of the business financial information.

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