2020 Year End Check List

MARY L. VANNONI, EA

(602) 243-1177     FAX: (602) 243-3430        (888) 769-3891 eFax: 1-888-889-4961

email: mary@mlking.biz        website:  www.mlking.biz

It’s that time of year! Here are some reminders to save or minimize your taxes for 2020. Most of these suggestions must be completed BEFORE 12/31/ 20. We also have information regarding the Equifax and other security breaches on our website. As with last year, another reminder to remain vigilant about IRS telephone scams (remember the IRS will NEVER call you). Refer to our website for more information or feel free to contact us with any questions regarding these matters.

YEAR END TAX PLANNING CHECKLIST (before 12/ 31/ 2020)

 STATE TAX If you itemize, prepay state tax owed before 12/31/2020.

Arizona residents – utilize the tax credit programs in lieu of Arizona tax owed. Depending on your marital status, you can do any or all  of these:

Public Schools

Individual Max

$200

Joint Max

$ 400

 

Military Family Relief Fund	200	400	($1 million max already received, closed)
Charities that Help the Poor	400	800
Foster Care	500	1000
Private Tuition	593	1138
Overflow Private Tuition	590	1131

           MORTGAGE Prepay your January mortgage payment.  Be sure to mail/pay early enough to be posted to your account on or before 12/31/2020. Pay your entire property tax bill, including installments that might be due in 2021 if under $10,000.  Call for more clarification if applicable.

           CHARITY Clean out the garage and closets. Give items to charity and ask for a signed and valued receipt. Items must be in “good used condition or better”. Donated vehicle deduction will be limited to charity’s sales price. Even if you claim the standard deduction, you can claim up to $300 in cash donations on your 2020 1040.

           MEDICAL EXPENSES Consider prepaying medical expenses if you meet the 7.5% threshold.  ALL health expenses are deductible in Arizona. Medical Mileage  = .17 per mile; Charitable Mileage = .14 per mile.

            WASH  SALES     Exchange stocks  or  mutual funds  that are down  in value. Excess capital losses can reduce other income by up to $3,000.

FEDERAL TAX CREDITS FOR SOLAR Tax credits for Solar Residential Electric Systems are available at 26% of cost with no upper limit through December 31, 2020.

           DEDUCTI ONS FOR SELF-EMPLOYED Mileage rate: .575 cents/mile; Medical premiums: 100% deductible for 2020; consider HSAs (Health Savings Acct); Retirement Plans: (Keogh/Money Purchase, Solo 401k must be set up by year end); RA – $6,000 ($7,000)*, SEP – Lesser of 20% of net self-employed income or $56,000; SIMPLE – $13,500 ($16,500)*, 401k – $19,500 ($26,000 over age 50)

           CHILD CREDITS  Child tax credit of $2,000 for each child under age 17 on December 31; Childcare Credit (and adult day care) up to maximum of $3,000 per child, maximum 2 children. Also

$500 credit for other dependents claimed on your return.

           EDUCATION CREDITS American Opportunity credit for first  four  years  of  post-secondary tuition (100% of the first $2,000 plus 25% of  the  next  $2,000);  Lifetime  Learning  Credit  –  20% credit up to $10,000 of expenses (max credit – $2000).  All based on limitations.

           GI FTING Make use of the $15,000 per donor annual exclusion by making gifts before year end.

           ROTH CONVERSION If your income bracket is low(er) this year, consider converting a portion or all of traditional  RA into a ROTHIRA, if eligible to do so, before 12/31/20.