Frequently Asked Questions about taxes

Updated 1/4/2020

Do I need to file a return?

What is the standard deduction?

What is my personal exemption?

What is my tax bracket?

How much can I deduct for mileage?

How much can I contribute to my retirement plan?

How much are the gift and estate tax exemptions? 

Do I need to file a return?

To taxpayers who have faithfully filed tax returns for years, it may be surprising to find that they may not have to file. Generally, you do not need to file a tax return if your income is under these amounts:

2019 Filing Status Federal Arizona resident
< age 65 65 or older Under 65 No tax*
Single $12,200 $13,850 $5,500 $12,200
Head of Household $18,350 $20,000 $5,500 $18,350
Married Filing Jointly $24,400 $25,700 $11,000 $24,400
Married Filing Separately $5 $5 $5,500 $12,200
Widow(er) with qualifying dependent $24,400 $25,700 N/A N/A

However...you must file a return if you had self-employment income of $400 or more.

Or, you should file if someone else (like your parents) could claim you as a dependent and you earned over $12,200 or had investment income (interest on savings, stock dividends, etc.) of more than $1,100.

Also, you should file a return even if your income is under these limits if you:

  • Had withholding on wages, pensions, retirement distributions or investment accounts.

  • Are eligible for an earned income credit or other credit.

The federal Form 1040 actually collects several other taxes including:

  • Self employment (Social Security and Medicare) tax

  • Social Security and Medicare tax on tip income

  • Early withdrawal tax on IRA's and retirement plans

  • Alternative Minimum Tax & Net Investment Income Tax

  • Household employee payroll tax ("nanny tax")

You may be required to file a state return even if you don't have to file a federal one. There are other circumstances where you might be required to file, or it might be beneficial to file, so check with an Enrolled Agent to be sure.

*These figures include the personal exemption and standard deduction. Even though there is generally no tax up to this amount, taxpayers must still file a return if their Arizona incomes are above the "no filing" amount.

Standard deductions

The IRS excludes from your taxable income a specified amount of expenses, called a "standard deduction." If your actual expenses in the allowed categories total more than the standard deduction amount, you may deduct those actual expenses, which is called "itemizing." If your itemized deductions are less than the standard amount, you are better off to use the standard deduction.* Only if spouse does not itemize; otherwise $0

# Amounts are indexed annually; Arizona has not yet released annual adjustments

@ Standard deduction for dependents is $1,100, unless earned income (not investments) more than $750

Age 65 or older Single or HOH gets an additional $1,650 standard deduction, $1,300 each age 65 for MFJ, MFS or QW

2019 Filing Status Federal Over 65 Both 65+ Arizona
Single $12,200 $13,850 N/A $12,200
Head of Household $18,350 $20,000 N/A $18,350
Married Filing Jointly $24,400 $25,700 $27,000 $24,400
Married Filing Separately $12,200 $13,850 N/A $12,200
Widow(er) with qualifying dependent $24,400 $25,700 N/A $24,400
Dependent of someone else $1,100 $2,750 N/A $1,100

Personal exemptions

The Tax Cuts and Jobs Act of 2017 eliminated federal personal exemptions on federal returns for 2018 and future years. Arizona has "conformed" to federal so there are no longer personal exemptions for Arizona.

Tax brackets

Income tax is based on your income after standard or itemized deductions, and other adjustments are subtracted. A tax bracket is the rate at which the top of your income is taxed, but not all of it. Someone in a 22 percent tax bracket has part of their income taxed at 10 percent and part at 12 percent, with only the highest portion at 22 percent. The tax bracket tells you how much you will have to pay in federal income tax on each additional dollar you make. * Net Investment Income (NII) tax of 3.8% is additional for taxable income above $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately).

2019 Single HOH MFJ or QW MFS Trust
Federal For income over…
10% $0 $0 $0 $0 $0
12% $9,700 $13,850 $19,400 $9,700 N/A
22% $39,475 $52,850 $78,950 $39,475 N/A
24% $84,200 $84,200 $168,400 $84,200 $2,600
32% $160,725 $160,700 $321,450 $160,725 N/A
35% $204,100 $204,100 $408,200 $204,100 $9,300
37% $510,300 $510,300 $612,350 $306,175 $12,750

 

Capital Gains Single HOH MFJ MFS
2019 For income over…
0% $0 $0 $0 $0
15% $39,375 $52,750 $78,750 $39,375
20% $434,550 $461,700 $488,850 $244,425
Arizona Single HOH MFJ MFS Trust
2019 For income over…
2.59% $0 $0 $0 $0 $0
3.34% $26,500 $53,000 $53,000 $26,500 $26,500
4.17% $53,000 $106,000 $106,000 $53,000 $53,000
4.50% $159,000 $318,000 $318,000 $159,000 $159,000

 

2018 Single HOH MFJ or QW MFS Trust
Federal For income over…
10% $0 $0 $0 $0 $0
12% $9,525 $13,600 $19,050 $9,525 N/A
22% $38,700 $51,850 $77,400 $38,700 $2,600
24% $62,500 $82,500 $165,000 $82,500 $6,100
32% $157,500 $157,500 $315,000 $157,500 $9,300
35% $200,000 $200,000 $400,000 $200,000 N/A
37% $500,001 $500,001 $600,001 $300,001 N/A

 

Capital Gains Single HOH MFJ MFS
2018 For income over…
0% $0 $0 $0 $0
15% $38,600 $51,700 $77,200 $38,600
20% $425,800 $452,400 $479,000 $239,500

 

Arizona Single HOH MFJ MFS Trust
2018 For income over…
2.59% $0 $0 $0 $0 $0
2.88% $10,602 $21,202 $21,202 $10,602 $10,602
3.36% $26,501 $53,000 $53,000 $26,501 $26,501
4.24% $53,000 $105,998 $105,998 $53,000 $53,000
4.54% $158,996 $317,990 $317,990 $158,996 $158,996

 

Mileage rates

Standard mileage rates may be used as an alternative to deducting actual expenses. The standard mileage rate must be claimed the first year a vehicle is used for deductible purposes; you cannot change to it once you have started claiming actual expenses. To deduct either mileage or actual expenses, you must have a written record for each trip showing: Date, Miles driven, Where to, Business purpose

Use 2020 2019 2018 2017 2016 2015
Business 57½¢ 58¢ 54½¢ 53½¢ 54¢ 57½¢
Medical 17¢ 20¢ 18¢ 17¢ 19¢ 23¢
Moving N/A N/A N/A 17¢ 19¢ 23¢
Charitable 14¢ 14¢ 14¢ 14¢ 14¢ 14¢

 

Retirement plan limits

Taxpayers age 50 and older may contribute a higher amount to retirement plans to "catch up," regardless of whether or they had contributed the maximum amounts earlier in life.

Retirement plan contribution limits  
Year IRA & Roth 401(k) & 403(b) SEP
Under 50 Catchup Under 50 Catchup 25% of pay
2020 $6,000 $7,000 $19,500 $26,000 $57,000
2019 $6,000 $7,000 $19,000 $25,000 $56,000
2018 $5,500 $6,500 $18,500 $24,500 $55,000

 

Income limits for retirement plans  
2020 Deduct Traditional IRA Roth IRA  Saver's
  w/workplace no work plan contrib Credit
Single $65,000 N/A $124,000 $32,500
HOH $65,000 N/A $124,000 $48,750
MFJ $104,000 N/A $196,000 $65,000
MFS $0 N/A $0 $32,500

 

Social Security 2020 2019 2018
Maximum earnings taxable $137,700 $132,900 $128,700
  by Social Security        
Birth year to turn FRA this year 1954 1953 1952
Maximum earnings before FRA $18,240 $17,640 $17,040
Max earnings turning FRA this year $48,600 $46,920 $45,360
Maximum benefits at FRA $36,132 $34,332 $33,456
  Monthly     $3,011 $2,861 $2,788
Medicare Part B Premium $144.60 $135.50 $134.00

 

Estate and gift tax exemption

Your estate will have to pay taxes if its net value when you die is more than the "exempt" amount set by Congress. The exemption amount is reduced by any gifts throughout the lifetime of more than the annual gift tax exclusion limit. The gift exclusion is per donor and per recipient, so a married couple can exclude gifts up to double the amount shown in the chart to a child, for instance. Making a gift of more than the annual exclusion does not trigger immediate taxes, only the need to file a gift tax Form 709.

Year of Federal estate Highest tax rate on   Annual gift  
death tax exemption exceeding exemption   tax exclusion
2020 $11.58 million 40%     $15,000  
2019 $11.4 million 40%     $15,000  
2018 $11.18 million 40%     $15,000  
2017 $5.49 million 40%     $14,000  
2016 $5.45 million 40%     $14,000  
2015 $5.43 million 40%     $14,000