Preparing for Retirement: Social Security
If you have some spare time tomorrow afternoon, I'd like to recommend a webinar co-hosted by a great local financial planner, Adam Bellacicco. He will be discussing how and when to claim Social Security based on your retirement plan, which I know is a question many of my clients have. Here is the link to sign up for this free talk tomorrow, Oct. 29th, at 4 PM Eastern:
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IMPORTANT DATES
November 1 - December 15, 2020
December 31, 2020
Last day to make charity, medical, real estate, property tax, 529 plan, or other deductible payments for the year. I recommend you make payments a few days before the year end to ensure they are processed.
January 15, 2021
Fourth quarter 2020 estimated tax payments due
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IRS has just announced tax brackets and standard deductions for tax year 2021 ( details available here), but for now we are more concerned with the rates for 2020, which will determine what my clients owe or are due next April.
Just as it did last year, the standard deduction for tax year 2020 has risen by $200 for single filers, reaching $12,400, and by $400 for married couples filing jointly, to $24,800. We will generally only itemize for you if it puts your deductions over those amounts.
IRS.com has put together nice tables of the tax rates for each income bracket, based on filing status: click here for those charts. Remember that when you move up to a higher income bracket, only that additional money is subject to the higher rate, not all your income. |
YEAR-END TAX PLANNING
Below are some tips to consider in the final months of the year for saving time and possibly money in the upcoming tax season.
- If you will likely itemize deductions, remember December 31st is the last day to make medical, charitable, and other deductible payments to count toward 2020. For many taxpayers it makes sense to "bunch" deductible expenses in one year, and take the standard deduction the next.
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NOTE: Due to the CARES Act, this year you can make a $300 charitable donation and it will be deducted from income, even if you do not otherwise itemize.
- If you have a flex spending plan at work, check if the money will be forfeited on December 31. Some companies can offer a grace period this year until March 31, 2021.
- If you purchase medical insurance through the Healthcare.gov marketplace, November 1 through December 15 is your window to switch plans. Many premium rates have lowered this year, so it is worthwhile to take a look and update your income.
- If you have moved or have a new preferred phone number or email, please send us that information. Also, we will be sending out tax organizers in January by mail and through the Intuit client portal. If you would like to receive your package a different way than you did last year, please let us know.
- If you are self-employed or have significant other non-wage income, it might help to increase withholding or pay estimated taxes now to avoid penalties in April. Now is a good time to contact the office to discuss income projections or other tax planning topics.
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