2021 Tax Season - Get ready with these Tax Planning Opportunities for Individuals
2020 is almost gone and we have to say this has to be one of the most challenging years for so many of us. Covid has changed everything, including our financial situation. For some, this year brought good things and for others it wasn’t that pleasant. But, regardless of your circumstances we want you to start getting ready for the upcoming year.
We have gathered some escenarios and some Tax Strategies you can take advantage of when you file your 2020 Tax Return.
A good percentage of Americans have claimed Unemployment benefits in 2020, however, not everyone is aware that this is taxable by the IRS and depending on your state rules is also taxable at the State level. You might have requested to withhold taxes, that doesn’t mean it will be enough to cover the liability. We recommend you to review your numbers in order to avoid a surprise when filing your taxes next year.
Did you know some states penalize individuals for not having health insurance? If you lost this benefit in 2020 you should check your state requirements and see if they are offering any relief you might be able to apply for. For some, the penalties can be a substantial amount.
Any kids at home? If you filed in 2018 and 2019 under the Kiddie Tax Rules, you might want to look into the possibility of amending these returns, there is a good chance you can get a refund due to some changes made by Congress.
Other changes made by Congress by extending some federal tax provisions (tax extenders) can benefit you like the credit for energy-efficient home improvements, forgiveness of qualified principal residence debt income; deduction of mortgage insurance premiums; and credits for fuel cell vehicles, two-wheeled electric vehicles, and alternative-fuel refueling property. Some of these were extended retroactively to 2017 making this a big opportunity for some to go back and amend their previous years.
If you sell your main house, up to $250,000 ($500,000 if filing jointly) can be excluded from the gain if you meet certain requirements.
If this year you are going through a separation or divorce, you probably want to know the changes this will cause in your 2020 tax return that will depend on so many variables like who takes credit for the kids, alimony and so many others.
At My Books at Taxes our biggest goal is minimize the tax liability for our clients while following the rules. A tax projection is a great way to know what is coming, also, it gives you the time to change some circumstances that can benefit you in the future.
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