What Tax Moves Should Individuals Make Before Year End?December 10, 2020
You’ll want to check out our Year End Tax Guide for Individuals, which covers everything you need to know as we head into 2021, including the impact of COVID-19 and the recent election.
2020 has presented many unique challenges to individual taxes. What started as a normal filing season quickly turned into a tax season no one had ever encountered before. Ongoing planning for changes introduced by the CARES Act and potential changes brought on by the recent election will be crucial as you prepare for 2021 and beyond. Our Year End Tax Planning Guide for Individuals can help you prepare. Here’s a sneak peek.
What’s inside our 2020 Year End Tax Planning Guide for Individuals?
In 2020 there have been two major developments that are likely to impact your current tax situation- the COVID-19 pandemic and the 2020 elections. As you prepare for 2021, it would benefit you to take advantage of limited time tax savings opportunities before they potentially expire.
Here are some considerations:
- Consider timing income and deductions to maximize taxable income in 2020 while income and capital gains tax rates remain low.
- When tax planning at year end, focus on your marginal rate. That’s the rate you’ll pay on your next dollar of income.
- To itemize or not to itemize? Compare the increased 2020 standard deduction amounts to how much you’ve spent on items that qualify as itemized deductions.
- Timing strategies could help you avoid the alternative minimum tax (AMT) in 2020.
- Did you sell your residence in 2020? You may be able to exclude the gain from your taxable income .
- Looking to give to charity? If you itemize deductions, this could be very tax-savvy.
- Be mindful of changes to tax credits and phaseouts for higher education costs.
- Read up on changes to retirement under the SECURE Act. One notable change is that people of any age can contribute to retirement accounts if they have earned income. Also, the CARES Act waived RMD requirements for 2020.
- Kiddie tax rules have reverted back to pre-TCJA law. You may have some planning to do.
Check out our 2020 Year End Tax Planning Guide for Individuals.
Questions? Contact us.