Today’s Puzzle:
If you’re getting prepared to file your 2020 taxes and looking ahead to the changes that might be coming this year and beyond, we’ll run through some of the key items from a very unique and challenging last 12 months.
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(Click the featured times below to jump forward in the episode)
The Solution:
Tax season is always a busy time of the year but it might get a little more complicated with everything that happened over the course of 2020.
As you get prepared to file this year, we wanted to take a little time to look back at the areas of 2020 that most people are asking about. The podcast will focus on changes that have happened due to the pandemic along with what might be coming down the road.
Let’s start with the stimulus payment(s) that millions of Americans received over the course of 2020. The primary question we’ve heard is whether this is taxable. The short answer is no per the CARES Act because it is treated as a credit. That’s not the case with the extra unemployment benefits that many people received during the year as part of that relief package. Also keep in mind that there could be another payment coming from the Biden administration, which should be treated the same as the others but make sure you check with your advisor to confirm.
Another area that comes up a lot this time of year is tax brackets. These are changing pretty frequently, but the good news is that there weren’t any changes from 2019 to 2020. Nikki will clear up some common misconceptions about tax brackets during the show and how they are actually applied to your income.
Another big change from last year happened with RMDs. We were all talking about the SECURE Act when the year started because it pushed the age of Required Minimum Distributions back from 70.5 to 72. But when the market crashed at the beginning of the pandemic, the government allowed people to temporarily skip their RMDs for the year so they weren’t forced to pull out money while prices were significantly down. Things will return to normal in 2021 so plan accordingly.
When it comes to deductions, there are two key areas we’ll help you with on this episode. The first are charitable donations, which provided an opportunity for people to give more and receive a bigger tax break. The second deduction everyone wants to know about is the home office. With many of us working from home the majority of the year, can we save some money on taxes? The answers vary for different people and Nikki will break it all down on the show.
As you listen the podcast and think deeper about your taxes, remember that tax planning should be a part of your ongoing process when getting prepared for retirement. Our team helps clients in this area everyday and it make a significant difference in how much of your money you are able to keep later in life.
Listen to the entire episode or click on the timestamps below to hop around to different topics.
1:45 – Stimulus payments
5:31 – Tax brackets
7:55 – Extra deductions for charity
10:36 – Required Minimum Distributions
12:55 – Home office deductions
15:14 – Filing advice
17:54 – State specific changes
18:34 – How our team assists with tax planning
The Full Picture:
“Filing is just filing. You’re looking backwards. You really want a tax planner or somebody that can help you plan so that when you file, you’re taking advantage of everything you should have in the following year.”
– Nikki Earley
Free Stuff:
Click the image to get a free retirement rescue toolkit.
Additional Resources:
The host: Nikki Earley – Schedule A Time To Meet – Or Call: (513) 563 – 7526
