Year-End Tax Planning In A Year Of Political Uncertainty

Cash basis taxpayers have a large number of ways to control their 2020 reported taxable income which is even more important this year since we may be moving from historically low tax rates to much higher rates post-2020.

While a Biden victory appears fairly certain, we find ourselves in the position of not knowing whether the Democrats or Republicans will be controlling the Senate.  The two federal Senate seats in Georgia will not be determined until January leaving us with significant tax planning uncertainty.  These seats are unsettled since neither candidate won over 50% of the votes cast. The Republicans just need one of these seats to control the Senate, while the Democrats must win both seats.

Senate control is critical to determining whether the Biden Administration will be able to push though their promised tax increases (see attached summary) including increasing ordinary tax rates (from 37% to 39.6%) and long-term capital gain rates (from 23.8% to 39.6%) for taxpayers with more than $400,000 and $1,000,000, respectively, of taxable income.

Read More

Charles Woodson- Year End Tax Planning

This has been a tumultuous year for taxes, with the tax reform that passed in late 2017 generally becoming effective in 2018, often with significant changes for both individuals and businesses. This is the first major tax reform legislation in more than 30 years, and to implement it, the IRS will have to create or revise approximately 450 forms, publications and instructions and modify around 140 information technology systems to ensure it can accommodate the newly revised or created tax forms, not to mention writing tax regulations for all of these changes – a daunting task for sure. The following are issues that could affect you and that you may need to plan for.

Refund or Tax Due? – Most taxpayers are equating the recent tax reform to a larger refund when their 2018 tax return is prepared. However, that may not be the case because your tax refund is the difference between what you prepaid through payroll withholding and estimated tax payments and what you owe. Even if your tax bill is lower, if your prepayments were also lower, then your refund may not be as expected.

Read More

Year-end tax planning is slightly different this year due to the proposed changes to the tax system. Despite this uncertainty however, there is still plenty that expats can do before the holidays to make their lives easier in 2018. They can even save some money, too!

Read More

John Dundon

In my last post about how year end tax planning starts with reassessing one’s commitment to charitable donations, I mentioned that my mom donated her appreciated shares of Exon Mobile to a Donor Advised Fund (DAF). Many readers had questions about what a DAF is and the mechanics of donating to one. So much so I was compelled to follow up in this post. Read More

John Dundon

How do you plan to give back next year?

The more money we tend to have, the harder it tends to be to share our resources with others. This is true up to the point we start to appreciate the significance of giving back. For many this tipping point comes far too late in life if at all. If you charitably donate or are considering being charitable, how much are you donating? How are you making those donations? Money? In kind? Time? How do you decide what is appropriate?

Read More

December 1 – Time for Year-End Tax Planning

December is the month to take final actions that can affect your tax result for 2015. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status, and those who sold property during 2015 should call for a tax planning consultation appointment.

December 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 10. Your employer is required to withhold Read More

For the past few years, year-end tax planning has been challenging due to the lateness of action by Congress. This year is no different because of uncertainty over whether Congress will extend any of the many expired or expiring tax provisions. However, regardless of what Congress does later this year, solid tax savings can still be realized by taking advantage of tax breaks that are still on the books for 2015. For individuals and small businesses, these include:

• Capital Gains and Losses – You can employ several strategies to suit your particular tax circumstances. If your income is low this year and your tax bracket is 15% or lower, you can take advantage of the zero percent capital gains bracket benefit, resulting in no tax for part or all of your long-term gains. Others, affected by the market downturn earlier this year, should review their portfolio with an eye to offsetting gains Read More

Year-end tax planning could be especially productive this year because timely action could nail down a host of tax breaks that won’t be around next year unless Congress acts to extend them, which, at the present time, looks doubtful. These include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the-line deduction for qualified higher education expenses; and tax-free distributions by those age 70-1/2 or older from IRAs for charitable purposes.

Some areas to draw your attention are listed below:


High-income-earners have other factors to keep in mind when mapping out year-end plans. Read More

TaxConnections Blogger PostOne of the key things to year-end planning is to make sure you understand your tax payments.  This is not the sexiest of year-end planning topics, but it is one of the more important ones.  The first goal is to determine how much you might owe when the return is filed.  The second goal is to analyze the estimated tax payments.  The third is to save taxes with the timing of state payments.

Nothing is worse than an unexpected tax bill in April when you go to file your tax return.  That is one of the common reasons people become frustrated with their tax advisors.  An unexpected tax bill is why people dread filing their returns.  If you do planning in November/December, then at least you have five months to prepare for that tax bill that is due April 15th.  This year with the federal and Minnesota tax rates higher for high income taxpayers, planning for a tax bill in April is even more crucial.

It is important to make sure your estimated tax payments are enough to meet the safe harbor estimates so you don’t incur estimated tax underpayment penalties.  The underpayment penalties aren’t crazy high; they depend on the interest rates which are quite low at the moment.  Just the idea of paying the IRS a few dollars more is enough to make some people sick.  The safe harbor means that if your AGI was over $150k, then 110% of your prior year tax needs to be paid quarterly.  If your AGI is less than $150k, then only 100% of the prior year tax needs to be paid quarterly.  Keep in mind that wage withholding is counted as paid throughout the year, even if the withholding occurs on a year-end bonus. Read More