Year-End Tax Planning Considerations
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1. Charity. Big deductions are still allowed.
2. New Jersey and Connecticut taxpayers. If you are a Corporation or Pass Through Entity (PTE) in NJ or CT, you can still pay state tax at the corporate level and get credit at the individual level to bypass the $10,000 SALT cap limitation.
3. Estimated taxes for 2020 are as follows:
a. 100% of last year tax (2019).
b. 90% of this year’s tax (2020).
c. 110% if your AGI exceeds $150,000.
If you pay quarterly, then Q4 is due Jan. 15, 2021
4. PPP Loan Forgiveness – you may consider reviewing your PPP loan for forgiveness OR keep it as very low interest rate loan. Forms are available to do so. Contact the banker who gave you the load. There are proposals in Congress to forgive PPP loans of less than $150,000, but based changes in Congress it is hard to predict the outcome of the automatic forgiveness proposal.
5.Start a retirement plan if you don’t have one. This must be done before Dec. 31.
6. Sell long-term stock before Dec. 31. Up to $3,000 in capital losses can be used against your gains and any excess loss can be carried over into future years..
7. Purchase equipment or a vehicle for use in your business by Dec. 31st to take advantage of bonus depreciation (Sec. 179).
8. Prepay your expenses and defer income whenever you have available cash to do so.
IRS Audits on the Rise
- Stepped up audits for those who report high Schedule C losses.
- Taxpayers who don't report foreign income or FBAR compliance. Ref. recent Brockman case.
- Anyone dealing in crypto-currency.
Real estate losses are passive losses and are not deductible subject to some thresholds.
- Commingling of business and personal expenses.
Why Have a Personal Financial Statement?
- Helps your plan your overall wealth.
- Aids in estate planning, gifting and trusts.
=========================================Now Is a Great Time to Refinance
- Mortgage rates are at historic lows.
- Lower your monthly payments; increase cash flow.
Security - Phone scams. NEVER respond to phone calls or emails from the IRS. The IRS will only send you written communication by postal mail. Never email documents containing your Social Security numbers.
Why You Want an Indepndent Review of Your Company's Financial Statements
Banks, lenders, acquirers and auditors look more favorably at your financials if they’re independently reviewed or audited and you’ll likely receive better rates and terms.
Contact us for assistance with your personal and business financial statements.
We offer three levels of service:
1) Compilation. Simple compilation of financial statements.
2) Review. More analytical procedures performed.
3) International Tax Planning. (India-US specialty).