The filing date for 2019 taxes may still be two weeks away, but it’s not too early to start thinking about 2020 taxes. While the filing deadline for 2020 taxes may remain April 15, 2021, several items should be on your radar now, including:
Required Minimum Distribution (RMD) Waivers: The CARES Act contains a provision for retirees who can afford to defer retirement plan (IRA, 401(k), etc.) distributions for 2020. The RMD waiver enables retirees to avoid liquidating assets at low prices associated with significant drops in asset values caused by the economic fallout of the Coronavirus pandemic. If you have already taken RMDs from an IRA/401(k) in 2020 and would like to reverse the distribution, these RMDs may be rolled back into your retirement accounts by July 15, 2020.
For those over 70 1/2: If you’re over the age of 70 1/2 and claim the standard tax deduction, it’s advisable to make charitable contributions directly from IRAs. Also note that RMDs now must begin in the year you turn 72 and no longer 70 1/2.
Home Office Deductions: While the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) brought a number of tax changes, there is still no deduction for home offices for W-2 employees, even for those working from home full-time. If you are self-employed and use a space in your home as your principal place of business, you may be eligible for a home office deduction.
Economic Stimulus Payments: Approximately 130 million Americans received Economic Stimulus Payments from the Internal Revenue Service, and it’s not known if there will be another. While these payments are not taxable and will not reduce your future tax return amounts, you should keep the letter you received from the IRS and you’ll need to report the amount you received on your 2020 return.
New $300 Charitable Donation Deduction: As part of the CARES Act, you may deduct up to $300 of your cash donations without itemizing deductions.
Estate and End of Life Planning Reminders: Avoid probate court, protect your loved ones and your estate by establishing wills and trusts. Everyone should have a durable power of attorney and add names to bank accounts to facilitate the handling of your bills in the event you become sick or incapacitated for a period of time.
Deadlines for 2019 Taxes: The IRS has affirmed they will hold to the July 15th filing deadline. Extensions remain available to the normal extended due dates of September 15th and October 15th depending upon the type of tax return.
If you have any questions regarding your 2020 taxes, the many changing tax laws and economic relief and stimulus programs please email or call your Lopata, Flegel & Company contact, or call the firm at 314-514-8881.
