Do This Before the End of the Year!
It’s easy to get lost in the holiday spirit – and with the year we’ve all had, many of us are just glad that 2020 is nearly over.
Nevertheless, now is the time to do all you can to maximize your tax savings.
First things first…
Charitable giving. This is the time of year when charities “seem” more visible, but most donations must be dated before December 31st to count on your 2020 taxes. It is also not a bad time to try to spend a few minutes tracking down ALL of your receipts for donations and such before the end of the year. If you can’t find a specific receipt, it’s worth contacting the charity in question to see if they can share their copy. Do it now, though, because it’s often harder for charitable organizations and non-profits to find this material at the local level, especially when they staff with volunteers.
Retirement contributions. I harp ALL the time about this, and while you have until April 15th in some cases, MOST retirement funds require annual contributions before December 31st. Have you done it? If, like some folks, you’re waiting on an annual bonus, it might be worth it to go ahead and make the contribution and be assured it’s logged before year’s end. You can always go pay yourself back.
Sometimes you have to spend money to save money…
Another contribution that many overlook is college funds and the various healthcare accounts. Some, like HSAs (Health Savings Accounts) have stricter rules and guidelines than others, so BEFORE we get to the end of the year, it’s smart to review and see what you either need to use, save, or how much might roll over.
This year, more than many in recent memory, has seen a lot of financial impacts on families, and if you’re one of them, it’s also a smart strategy to do some calculating to see where your potential tax liability is, then reverse-engineer some solutions. I’ve had several calls from clients who have seen a dramatic change in incomes (up and down), and they will subsequently be in a different bracket this.
Perhaps you qualify for tax breaks you couldn’t claim in previous years, perhaps you took money from a retirement account, or maybe you changed jobs.
All these can have a dramatic effect on your taxes, so if that sounds like you, it’s not a bad thing for us to jump on a call to make sure you have your financial act together and prevent any “surprises” in 2021.
Jeff Roltgen, Tax Rescue CPA
Jeff@TaxRescueCPA.com
www.TaxRescueCPA.com
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