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With the end of the year in sight, here are a few year-end tax tips to help reduce your 2020 tax bill.

Deductions – With changes to the deduction threshold, it pays to know what your itemized deductions will be versus the standard deduction. Obviously, if your itemized deductions are over, you’ll save by itemizing. If you are close to being able to itemize, or perhaps you know you’ll be able to itemize in 2021 and not in 2020, use the calendar to your advantage and shift deductions from next year to this year (or vice versa) to maximize potential tax savings.

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Deductions II: The Sequel – One of the ways you can shift some deductions or get you over the threshold is bundling your charitable contributions. If you are close to the itemize deductions threshold, consider bundling a couple years of donations into one year or making a few more gifts to charities before the end of the year. (*New for 2020 ONLY – A provision in the CARES Act allows taxpayers who itemize deductions the ability to deduct up to 100% of their adjusted gross income for cash donated to public charities. There are some exceptions/exclusions and it is for 2020 only. If you take the standard deduction, you can take an above-the-line $300 deduction for cash donations to charity.)

Contribute to your 401(k) and HSA – Taxpayers can make tax deductible contributions to traditional IRAs and health savings accounts (HSA) all the way up until April 15, 2021 (Deadline for 401(k) contributions is December 31, 2020). All these types of contributions lower your taxable income. Remember, HSA funds can only be used for qualified medical expenses. Doing so avoids being taxed on the withdrawal.

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Check your W-4 – Regular followers of our social media will recall the ‘Paycheck Checkup’ – making sure your withholdings from your paycheck are current and accurate. If you have not been withholding enough, you could find yourself subject to penalties and interest. Update or adjust your W-4 at work to cover any possible shortfalls from not withholding enough taxes from your check. Utilize tools like the Tax Withholding Estimator to assist you in your efforts.

Don’t forget the business expenses – With the pandemic, perhaps you started your own business or maybe you started a freelance side job to help make ends meet. Be sure to claim your deductions for business expenses, as long as they are ‘ordinary and necessary.’ The home office deduction, write-offs for mileage as well as expenses for the equipment and materials purchased for the business are just some of the breaks available. Just remember, keep the receipts and keep track of your income and expenses.

One Last Thing

If you find yourself dealing with tax problems or facing unpaid taxes, Strategic Tax Resolution can help. We are your trusted local tax resolution experts. We handle the IRS and State taxing authorities on your behalf, working to negotiate the best possible outcome for you. You’ve got a guy on your side. Contact Strategic Tax Resolution today at any of our local area offices, by email or call 888-339-4914. Get Relief!

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