{"id":212789,"date":"2021-03-27T20:16:00","date_gmt":"2021-03-27T17:16:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/"},"modified":"2021-03-27T20:16:00","modified_gmt":"2021-03-27T17:16:00","slug":"its-not-too-late-to-save-on-your-2020-tax-bill-heres-how","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/","title":{"rendered":"#\n  It\u2019s not too late to save on your 2020 tax bill \u2014 here\u2019s how"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a4036ae2be6d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a4036ae2be6d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Tax_Guy_has_last-minute_tips_for_your_2020_Form_1040\" >Tax Guy has last-minute tips for your 2020 Form 1040<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Choose_to_deduct_state_and_local_sales_taxes\" >Choose to deduct state and local sales taxes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Make_a_deductible_health_savings_account_HSA_contribution\" >Make a deductible health savings account (HSA) contribution<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Compile_your_health_insurance_premiums_and_medical_expenses\" >Compile your health insurance premiums and medical expenses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Make_deductible_traditional_IRA_contribution\" >Make deductible traditional IRA contribution<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Small-business_owners_can_establish_SEPs_for_major_tax_savings\" >Small-business owners can establish SEPs for major tax savings<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Small-business_owners_can_take_advantage_of_COVID-19_tax_relief\" >Small-business owners can take advantage of COVID-19 tax relief<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/buradabiliyorum.com\/en\/its-not-too-late-to-save-on-your-2020-tax-bill-heres-how\/#Bill_Bischoff\" >Bill Bischoff<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  It\u2019s not too late to save on your 2020 tax bill \u2014 here\u2019s how<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Tax_Guy_has_last-minute_tips_for_your_2020_Form_1040\"><\/span>\n  Tax Guy has last-minute tips for your 2020 Form 1040<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000170905\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>Even though 2020 is, thankfully, in the review mirror, you can still take actions that will lower last year\u2019s federal income tax bill. We present some ideas.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Choose_to_deduct_state_and_local_sales_taxes\"><\/span>Choose to deduct state and local sales taxes<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p> If you live in a jurisdiction with low or no personal income tax or if you owe little or nothing to the state and local income tax collectors, you have options. You can potentially claim itemized deductions on last year\u2019s return for either: (1) state and local <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> sales taxes or (2) state and local income taxes. But not both.<\/p>\n<div class=\"paywall\">\n       <strong>Catch No. 1: <\/strong>This option is only relevant if your allowable itemized deductions for last year would exceed your allowable standard deduction for last year (generally $24,800 for married joint-filing couples, $12,400 for singles and those who use married filing separate status, and $18,650 for heads of households).<\/p>\n<p><strong>Catch No 2:<\/strong> You cannot deduct more than $10,000 for all categories of state and local taxes combined, or $5,000 if you used married filing separate status.<\/p>\n<p>If you can benefit from choosing the sales tax option, you can use an IRS-provided table based on your income, family size, state of residence, and local sales tax jurisdiction to figure your allowable sales tax deduction. But if you kept receipts from 2020 purchases, you can add up actual sales tax amounts and deduct the total (subject to the overall $10,000\/$5,000 limitation) if the actual number gives you a bigger write-off.<\/p>\n<p>Key point: Even if you use the IRS table, you can tack on actual sales tax amounts from major purchases like motor vehicles (including motorcycles, off-road vehicles, and RVs), boats, aircraft, and home improvements. In other words, you can deduct actual sales taxes for these major purchases on top of the predetermined amount from the IRS table.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Make_a_deductible_health_savings_account_HSA_contribution\"><\/span>Make a deductible health savings account (HSA) contribution<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>If you had qualifying high-deductible health insurance coverage last year, you can still make a deductible HSA contribution for your 2020 tax year if you\u2019ve not already done so. The contribution deadline is April 15. For the 2020 tax year, the maximum deductible HSA contribution is $3,550 for self-only coverage or $7,100 for family coverage (anything other than self-only coverage). More specifically, if you\u2019re eligible to make an HSA contribution for last year because you had qualifying high-deductible health coverage, you have until April 15 to establish an account and make your rightful deductible contribution.<\/p>\n<p><strong>Key point:<\/strong> The write-off for HSA contributions is an above-the-line deduction. That means you can take the write-off even if you don\u2019t itemize. More good <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>: the HSA contribution privilege is not lost just because you h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>en to be a high earner. Even billionaires can contribute if they have qualifying high-deductible health insurance coverage and meet the other eligibility requirements. If you are interested, your tax pro can supply full details. For details on how HSAs work, see my earlier column.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Compile_your_health_insurance_premiums_and_medical_expenses\"><\/span>Compile your health insurance premiums and medical expenses<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>If you will itemize deductions on your 2020 Form 1040, you can potentially claim a deduction for qualifying medical expenses that you paid last year, including premiums for private health insurance coverage and premiums for Medicare health insurance. Specifically, you can claim an itemized medical expense deduction to the extent your total qualifying expenses exceed 7.5% of your adjusted gross income (AGI) for the year. Since the TCJA greatly increased the standard deduction amounts for 2018-2025, fewer individuals will be itemizing on their 2020 returns. But having significant medical expenses may allow you to itemize and collect some tax savings.<\/p>\n<p><strong>Key point:<\/strong> If you are self-employed or an S corporation shareholder-employee, you can probably claim an above-the-line deduction for your health insurance premiums \u2014 including Medicare premiums. And you don\u2019t need to itemize to get the tax-saving benefit. Ask your tax advisor for details.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<h6><span class=\"ez-toc-section\" id=\"Make_deductible_traditional_IRA_contribution\"><\/span>Make deductible traditional IRA contribution<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>If you\u2019ve not yet made a deductible traditional IRA contribution for the 2020 tax year, you can still do so between now and the April 15 Form 1040 filing deadline. Then you can claim the resulting write-off on your 2020 return, assuming last year\u2019s income was not high to qualify.<\/p>\n<p>If your 2020 income was not too high to qualify, you can potentially make a deductible contribution of up to $6,000 or up to $7,000 if you were age 50 or older as of 12\/31\/20. Ditto for your spouse if you\u2019re married. Thanks to a change included in the 2019 SECURE Act, you now make traditional IRA contributions regardless of your age. Before the SECURE Act, you lost the right to make traditional IRA contributions after reaching age 70\u00bd. Thankfully, that restriction is now gone, and we won\u2019t miss it.<\/p>\n<p><strong>Catch No. 1:<\/strong> You must have enough 2020 earned income \u2014 from jobs, self-employment, or taxable alimony received \u2014 to equal or exceed your IRA contribution for the year. If you\u2019re married, either you or your spouse, or both, can supply the necessary earned income.<\/p>\n<p><strong>Catch No. 2:<\/strong> Deductible IRA contributions are phased out (reduced or eliminated) if last year\u2019s income was too high and you and\/or your spouse participated in a tax-favored retirement plan last year.<\/p>\n<ul class=\"articleList\">\n<li>\n      If you are unmarried and in 2020 participated in a tax-favored retirement plan (an employer-sponsored plan or a self-employed plan like a SEP or SIMPLE-IRA), your eligibility to make a deductible IRA contribution the 2020 tax year is phased out between adjusted gross income (AGI) of $65,000 and $75,000. AGI includes all taxable income items and certain deductions such as the aforementioned write-offs for self-employed health insurance premiums and HSA contributions.<\/p>\n<\/li>\n<li>\n      If you are married and both you and your spouse participated in retirement plans in 2020, your eligibility to make a deductible contribution for last year is phased out between joint AGI of $104,000 and $124,000. Ditto for your spouse\u2019s ability to make a deductible contribution.<\/p>\n<\/li>\n<li>\n      If you are married and only one spouse participated in a plan in 2020, the participating spouse\u2019s eligibility to make a deductible contribution for last year is phased out between joint AGI of $104,000 and $124,000. The non-participating spouse\u2019s eligibility is phased out between joint AGI of $196,000 and $206,000.<\/p>\n<\/li>\n<li>\n      If you are unmarried and did not participate in a plan last year, you can make a fully deductible contribution for the 2020 tax year, assuming you had enough earned income last year to cover it. In this scenario, high AGI does not limit your right to make a deductible IRA contribution for your 2020 tax year.<\/p>\n<\/li>\n<li>\n      If you are married and neither you nor your spouse participated in a plan last year, you can both make fully deductible contributions for the 2020 tax year, assuming you had enough earned income to cover them and assuming you both have IRAs set up in your respective names. In this scenario, high AGI does not limit your right to make a deductible IRA contribution for the 2020 tax year.<\/p>\n<\/li>\n<\/ul>\n<h6><span class=\"ez-toc-section\" id=\"Small-business_owners_can_establish_SEPs_for_major_tax_savings\"><\/span>Small-business owners can establish SEPs for major tax savings<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>If you work for your own small business and have not yet set up a tax-favored retirement plan for yourself, you can establish a simplified employee pension (SEP). Unlike other types of small business retirement plans, a SEP can be created this year and still generate a deduction on last year\u2019s return. In fact, if you are self-employed and extend your 2020 Form 1040 to October 15, 2021, you\u2019ll have until then to establish a SEP and make a deductible contribution for last year. The deductible pay-in can be up to 20% of your 2020 self-employment income or up to 25% of your 2020 salary if you work for your own corporation. The absolute maximum amount you can contribute for the 2020 tax year is $57,000. So, we can be talking major bucks here, and major tax savings too. However, you might not want a SEP if your business has employees, because you might have to cover them and make contributions to their accounts. That could be too expensive. Bottom line: if you have employees, don\u2019t start up a SEP without consulting your tax pro.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Small-business_owners_can_take_advantage_of_COVID-19_tax_relief\"><\/span>Small-business owners can take advantage of COVID-19 tax relief<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Several COVID-19 federal tax relief measures are potentially available to eligible individuals who own unincorporated businesses (sole proprietorships, single-member LLCs treated as sole proprietorships for tax purposes, partnerships, and multi-member LLCs treated as partnerships for tax purposes) and S corporations. These relief provisions can significantly improve your personal tax situation. For example, you can carry back a 2020 business net operating loss (NOL) for up to five years and recover some or all of the personal federal income tax paid for the carryback year(s). Talk to your tax pro about available COVID-19 tax relief provisions that could be claimed on your 2020 Form 1040 with tax-saving results.<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Bill Bischoff\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Bill_Bischoff\"><\/span>Bill Bischoff<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D29B99480FD0%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# It\u2019s not too late to save on your 2020 tax bill \u2014 here\u2019s how &#8221; Tax Guy has last-minute tips for your 2020 Form 1040 Even though 2020 is, thankfully, in the review mirror, you can still take actions that will lower last year\u2019s federal income tax bill. We present some ideas. Choose to&#8230;<\/p>\n","protected":false},"author":1,"featured_media":212790,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-212789","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/212789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=212789"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/212789\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/212790"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=212789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=212789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=212789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}