Skip Navigation Links

Tax Saving Strategies for 2020

Reduce Tax Liabilities

Reduce your tax liability by prepaying deductible expenses such as Mortgage Interest

Tax Reporting

Special COVID rules for 2020 allows you to lower both adjusted gross income and taxable income by donation to charity. Check IRS website to see if your charity is tax exempt.

New deduction for people who don't itemize. Individuals who elect to take the standard deduction generally cannot claim a deduction for their charitable contributions. However, the CARES Act permits these individuals to claim a limited deduction on their 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations and still claim the standard deduction. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify.
Up to 100% limit on eligible cash contributions made by itemizers in 2020. Subject to certain limits, individuals who itemize may claim a deduction for charitable contributions they make to qualifying charitable organizations. These limits generally range from 20% to 60% of an individual's adjusted gross income ("AGI") and vary by the type of contribution and type of charitable organization. For example, a cash contribution made by an individual to a qualifying public charity generally is limited to 60% of the individual's AGI. Excess contributions may be carried forward for up to five tax years.

Offset Capital Gains

If you have capital gains this year try the following:
a. Sell securities with losses to offset the gains – if market conditions justify it.
b. Identify worthless securities and bad debts take steps to ensure that the losses are deductible in the current year, by having the proper substantiation.
c. Use a bond swap to realize losses. This swap allows you to purchase similar bonds and avoid the wash sale rule while maintaining your overall bond positions.
Remember to avoid wash sale rules. Loss recognition is disallowed if the same or substantially identical security is purchased 30 days before or after the sale of the security that created the loss.

Buy business equipment

Buy business equipment take advantage of IRC Sec. 179 deductions and bonus depreciation available this year that can potentially allow you to expense the full amount of the equipment.
The Treasury Department and the Internal Revenue Service released the set of regulations implementing the 100% additional first year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.

Avoid underpayment penalty

Avoid underpayment penalty buy paying fourth quarter estimates due January 15 and increase the payment amount, if necessary.

Maximize contributions

Maximize your contributions to your retirement accounts and take advantage of the best plans available to you prior to December 31.

Defer Salary

Talk to your company and check if you qualify for defer salary, bonus or stock program.

Copyright © 2019 kyrishcpa.com. Powered by Frankels Infotech