As 2020 draws to a close, I am passing along some tax planning tips and a reminder of upcoming tax-related deadlines.

1. Fourth-quarter tax estimates are due soon. To avoid penalties, be sure to have your payment in the mail no later than January 15, 2021.

2. Review your pay stubs. If cash flow allows, make sure to maximize contributions to your tax-qualified accounts before year-end (e.g., 401(k)/403(b)) and to your IRAs (including Roth’s) before April 15, 2021.

3. Consider filling up lower tax brackets. A great way to get this done is with a Roth conversion, which must be completed by December 31st.

4. Consider the timing of state/local tax payments, medical expenses, and/or charitable contributions to maximize your itemized deductions and bring them above the standard deduction ($12,400 for singles and $24,800 for marrieds).

5. Take full advantage of the various tax advantaged opportunities for year-end charitable giving:

   • Take advantage of an easing of charitable deduction tax rules for 2020; a $300 above-the-line deduction and removal of the 60%-of-Adjusted Gross Income (AGI) limit, both for cash donations only.

   • Utilize a Donor-Advised Fund. This provides an immediate tax deduction for current contributions while maintaining the ability to distribute funds to a preferred charity at a later date.

   • Use a Qualified Charitable Contribution (QCD) to contribute directly to a charity out of an IRA (note - a QCD is only available to IRA owners over age 70.5).

   • Donate shares of appreciated securities (stocks, bonds, mutual funds) to receive a tax deduction and avoid capital gains tax.

At SoundView, we evaluate your personal tax situation and let you know if any tax planning strategies should be considered before year-end. We make every effort to coordinate planning with your tax preparer, both to get their input prior to implementation and to ensure they have everything they will need to file complete and accurate returns for you in the coming year.