Last-Minute Tax Tips for 2020

The most vigilant of individuals have been working hard on their taxes all-year-long. However, just because you haven’t already started, this doesn’t mean that there’s no time to turn this thing around. The problem with taxes lies in the fact that it’s not just labour-intensive, it also requires so much knowledge on your part. Still, with some tips and quotes, you can easily get the most out of your tax preparation, even on the tight schedule that you have. So, with that in mind and without further ado, here are some last-minute tax deductions that you have to consider.

1. Deferring your income

The first thing you need to hear is the one regarding deferring your income. The income is always paid in the year in which it’s received, however, what if it’s possible to postpone this payment for the next year. Why is this a good idea? Well, this year has been particularly bad for a lot of people, which is why every single dollar counts. One thing that’s possible is for your employer to postpone your year-end-bonus for the following year. In reality, the difference will be merely several days (or weeks) but, on paper, this is the next year’s income.

2. Are you working from home?

If you’re a telecommuter, you may be able to get a tax deduction off your utility bill as the cost of running a business. Nonetheless, this is not as simple as it sounds. First of all, you need to have a single-purpose room designated as a work area. This means no dual-purpose rooms like bedroom-offices, etc. The percentage of your home’s surface that this room takes will, in that particular scenario, be the amount that will be eligible for deduction. For instance, if the room takes 8 per cent of your home, you get an 8 per cent deduction.

3. Have a professionally-done report

The next important thing you need to keep in mind is the fact that you don’t really have to do your tax depreciation report on your own. In fact, it’s often better that you stick to what you know and outsource this task to a professional. The financial justification for this is quite straightforward. Try to make an estimate of how much your hour is worth and then try to calculate how many hours you will spend handling this tax report. Instead, entrust your tax depreciation report to professionals. This will make your job a lot simpler and will allow you to maximize your tax depreciation.

4. Plan your gifts

One of the things you need to keep in mind is the fact that you can give tax-free gifts that are up to $15,000 in value. Nevertheless, this is usually confined amongst family members. For this reason alone, you might want to think about strategical gifting within the family. This is a topic that’s closely related to estate and inheritance taxes. The majority of people postpone this in blind optimism but this too is something worth taking into consideration. The year is long (this one in particular) and it’s always better to be prepared for any possible outcome. 

5. Plan for life changes

Finally, for those who are in front of major changes, there are several tax-related truths that they have to hear. First of all, marriage changes your filing status, since it combines your incomes. This will introduce changes to your tax brackets, as well. Buying a new home might entitle you to claim a mortgage deduction, which often slips people’s minds. Refinancing your home means that you will become subject to the new cap on the mortgage. If you’ve borrowed prior to December 2017, things may be drastically different.

In conclusion

The last thing worth mentioning is the fact that tax laws change all the time, this is why you need to quickly review them before you start with your work. Now, these changes don’t exactly happen overnight but it’s not hard to imagine how this might have slipped by you. So, make sure to do a quick search or, at very least, refresh your memory of some of the things that you’ve forgotten. All in all, you have a lot of work in front of you and not a lot of time, so, the sooner you start the better.