How To Pay Less Taxes - 2020 Year-End Tax Planning for Individuals

In this video, I go over how to pay less in taxes and how to understand basic tax deduction strategies to help you qualify for the second stimulus payment and other state and local grants.

Strategy 1: Max Out Contributions to Employer-Sponsored 401(k)
This is a retirement account that is employer-sponsored which allows employees to contribute a portion of their wages. The contribution will reduce your taxable income dollar for dollar. With a 401(k), you’re allowed to contribute up to $19,500 in 2020 (50 years and older can contribute up to $26,000 in 2020) - which means the IRS will tax you as though you made $19,500 less in 2020.

Strategy 2: Contribute to a Traditional IRA
Qualified individuals may contribute up to $6,000 in 2020 (50 years and older can contribute up to $7,000 in 2020). Qualified traditional IRA contributions will lower taxable income.

Check to see if you qualify: https://www.nerdwallet.com/article/investing/traditional-ira-rules

Strategy 3: Cash Donations to Public Charities is
For 2020, under the CARES Act, cash donations to public charities will be 100% deductible if you itemize.
More information: https://www.plantemoran.com/explore-our-thinking/insight/2020/07/cares-act-increases-deductibility-of-2020-charitable-contributions#:~:text=The%20Tax%20Cuts%20and%20Jobs,)%20to%20100%25%20for%202020.

Strategy 4: $300 Cash Donation to Public Charity - Above the Line Deduction
More information: https://www.irs.gov/newsroom/special-300-tax-deduction-helps-most-people-give-to-charity-this-year-even-if-they-dont-itemize#:~:text=In%20tax%2Dyear%202018%2C%20the,made%20to%20charity%20during%202020.

Strategy 5: Donate RMDs to Public Charity
RMD recipients may donate up to $100,000 in RMDs to a qualified charity and not include such donation in their taxable income.
More information: https://www.fidelity.com/learning-center/personal-finance/retirement/qcds-the-basics

Strategy 6: Maximize Health Savings Account Contributions
Maximum contribution amounts for 2020 are $3,550 for self-only and $7,100 for families. The annual “catch-up” contribution amount for individuals age 55 or older will remain $1,000. Consumers can contribute up to the annual maximum amount as determined by the IRS.
More information: https://www.healthcare.gov/glossary/health-savings-account-hsa/#:~:text=For%202019%2C%20if%20you%20have,family%20coverage%20into%20an%20HSA.

Strategy 7: Maximize 529 Contributions
https://www.savingforcollege.com/article/how-much-can-you-contribute-to-a-529-plan#:~:text=One%20of%20the%20many%20benefits,in%202019%20and%20in%202018.

Please note that this video is for information purposes only and is not intended to provide or relied upon for tax, legal, or accounting advice. Please consult your own CPA, tax advisor, legal and accounting advisors.

#taxplanning #ppp #ppploan #pppapplication #pppforgiveness #ppploanforgiveness #taxtips #tax #taxes #cpa

Видео How To Pay Less Taxes - 2020 Year-End Tax Planning for Individuals канала Stephen Lee CPA