Good Financial Reads: Tax Planning for Beginners

No one wants to think about 2020 taxes right now, but now is the best time to think about tax planning, right before you get into the holiday spirit and start wearing ugly sweaters. Spend some time finding ways to keep more of your hard-earned money, and we have some ideas and reminders for you.

What do we want? To pay less taxes!

When do we want it? Now! (Financial planners cringe in the background.) 

While that’s a chant we all can get behind, my counterargument is that we are all best served to lower our lifetime tax bills, versus lowering a single year’s tax bill. 

In light of the COVID pandemic, the CARES act has created new planning opportunities, including the ability to deduct up to 100 percent of your income for charitable contributions.  This important incentive comes at a crucial time when the need is great.  Planning your charitable giving, however, should be done in a way that avoids some unforeseen pitfalls and that takes advantage of strategies that can help both the donor and the recipient!  

For those who are charitably inclined, 2020 may be the best year ever for reaping the tax benefits of your generosity.   

Over the weekend, Vice President Joe Biden and his running mate, Kamala Harris, were declared the 2020 Presidential Election winners. Since Vice President Biden has been declared the winner of the 2020 Presidential Election, I wanted to inform you of some of the potentially significant tax changes that may be coming our way. I will discuss Biden’s proposals for tax bracket changes, QBI deduction for business owners, itemized deductions, retirement contributions, personal income tax credits, long-term capital gains taxes, 1031 exchange, and estate and gift taxes. Please keep in mind that these are the changes he has proposed and will still have to pass through Congress, so these potential changes are subject to change and/or may not get passed.

As we approach the year-end and get ready for the holidays, let’s consider doing some tax planning for 2020 and beyond. This year, we break our discussion of year-end tax planning into two parts. We cover some business tax planning tools in this post, and continue with individual tax planning in the next post.