End of Year Tax Tips for You

tax-tips

It’s been an unusual year with challenges that businesses and individuals never thought they would have to face. 2020 will certainly be a year we will not forget and COVID-19 has made businesses and individuals rethink their finances. November is more than half-way over with the end-of-year coming fast. End-of-year tax planning is more important now than ever. Here are a few tax considerations both businesses and individuals can do for their end-of-year planning:

Business-related end-of-year tax planning:

  1. The CARES ACT allows businesses to use current losses against past income for a faster refund. With President Trump’s disaster declaration, any business in America is eligible for refunds from losses that are COVID-19 related. These losses range from inventory, supplies, and the closing of a physical location. To be eligible, the losses must be directly related to COVID-19, and the business owner must be able to prove it.
  2. The CARES ACT will allow businesses to defer paying the usual 6.2% of social security taxes for the remaining year. A small business can defer half of the amount due by December 31, 2021 with the other half due December 31, 2022. This opportunity gives small businesses a chance to invest but should do so with caution. Nobody should make an investment this time of year and then pay end-of-year taxes.
  3. The CARES ACT is helpful legislation that can benefit small business owners. Why not use it to your advantage to benefit the most? We recommend setting up an appointment with an accountant to navigate the CARES ACT. SWVA Tax & Accounting can help you with this and more!

  Individual related end of year tax planning:

  1. If you have a medical flexible spending account, use it before the new year. You can spend your left-over money on 1. Glasses and contacts lenses 2. Pay deductibles or co-pays related to medical appointments, especially specialists that you have been putting off all year. 3. Stock up on any medicines you need for the coming year. You may need to talk with your doctor to change the amount that has been prescribed to you.
  2. Add to your retirement account while you still can. You can lower your taxable income by contributing to your retirement plans such as a 401(k), 403(b), IRA, and SEP. You can make contributions to your 401(k) and 403(B) until December 31. You can contribute to your IRA until April 15, 2021.
  3. If you have unwanted clothing and household items you can donate them to charity, but do it before January 1, 2021. Make sure you get a receipt from the organization you donate to. The deduction is limited to the fair market value you could have sold it at a yard sale.

Now is the time to do those last-minute tax preparation steps, so you can have a successful 2021. SWVA Tax & Accounting is here for you year-round. Pick up the phone and call SWVA Tax & Accounting now so you can plan for a better year ahead. Call 540-250-3198 today or schedule an appointment with SWVA Tax & Accounting or book online by clicking here. We’ll run the numbers, while you run the business.

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