--(BUSINESS WIRE)--Wolters Kluwer Tax & Accounting:
What: The year 2020 was dominated by continuing implementation of the Tax Cuts and Jobs Act and a variety of legislation addressing the COVID-19 pandemic. In addition, other tax legislation at the end of 2019 affected regularly expiring tax provisions, retirement provisions, and disaster relief. Besides all of this, President-elect Joe Biden has proposed significant tax increases for wealthier taxpayers and corporations. However, it is uncertain if he will be able to get his proposals through Congress. All these changes must be considered this year along with the usual year-end tax planning topics.
Why: Many of the tax law changes, including those related to COVID-19 pandemic relief, currently expire at the end of 2020. Both individual and business taxpayers may need to act before year-end to take advantage of many of these tax breaks.
- More than thirty tax breaks that Congress has permitted to regularly expire and then renew currently expire at the end of 2020, including individual, business, and energy tax breaks
- More generous charitable contribution deduction provisions expire at the end of 2020, including a new above-the-line charitable contribution deduction
- The ability to make expanded penalty-free withdrawals from retirement plans for COVID-related expenses expires at the end of 2020
- The deadlines to apply for Economic Stimulus Payments expire before the end of the year, although a tax credit is also available on the 2020 tax return
- Employers must continue to deal with a variety of tax credits and deferrals related to employee payroll taxes that expire at the end of 2020
- A number of tax provisions provide retroactive relief, which might warrant filing of amended tax returns for prior years, including net operating loss carrybacks, modifications to deductions for non-corporate business losses, modifications to business interest deduction limitations, Qualified Improvement Property, the Kiddie Tax, disaster relief, and those 30+ regularly expiring provisions
- In addition to these, there are the usual year-end tax planning strategies to defer income, accelerated deductions, review your investment portfolio for gains and losses, and take maximum year-end advantage of available tax breaks
- Possible tax increases in 2021 might warrant a reversal of the usual year-end tax planning: accelerate income and postpone deductions, realize capital gains, look at lifetime gifts, and consider Roth conversions
Who: Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, can discuss in greater detail these year-end tax planning opportunities.
PLEASE NOTE: The content of this alert has been prepared by Wolters Kluwer Tax & Accounting for general informational purposes only. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering legal, accounting, or other professional services.
Contact: To arrange an interview with Mark Luscombe or other federal and state tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topics, please contact Bart Lipinski.