Show Notes for this Episode:
2020 is one of those years where we could be on the verge of major tax changes next year and in future years. Unfortunately, we won’t know more about this until 2021. I don’t like to speculate or make bets on what could happen. It’s best to go with what we know to be true for the 2020 tax year.
With a Biden administration and a Democratic Congress, we could see the Biden Tax Plan having a much better chance of getting implemented. Again, we won’t know this until next year!
The end of the year is a really good time to do tax planning. There are a handful of tax planning strategies that might make sense for you to take advantage of based on your situation. However, I also recommend that you do tax planning throughout the year. There are always potential opportunities to reduce your taxes if you stay ahead of this each year.
Although CPA’s are great for doing tax returns, many of them do not have the time to help you plan ahead on your taxes strategically. This is where a Certified Financial Planner™ can really be valuable. An experienced CFP® can help you with tax planning strategies throughout the tax year.
What you will learn in this episode:
- How to better understand the tax bracket system and where you fall (see 2020 tax brackets below)
- Tips for adjusting your withholding for 2020
- Opportunities to consider if you’re income was lower this year and/or you lost your job due to the pandemic
- An easy way to lower your tax bill whether you itemize or take the standard deduction
- Additional retirement savings opportunities to take advantage of before year-end
2020 Tax Brackets for Single Filers and Married Couples Filing Jointly
|Tax Rate||Taxable Income (Single)||Taxable Income (Married Filing Jointly)|
|10%||Up to $9,875||Up to $19,750|
|12%||$9,876 to $40,125||$19,751 to $80,250|
|22%||$40,126 to $85,525||$80,251 to $171,050|
|24%||$85,526 to $163,300||$171,051 to $326,600|
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