TAXES IN 2020: A LOOK AT THIS YEAR’S TAX SEASON AND HOW YOU CAN PLAN FOR NEXT YEAR
Tax Season is in full swing, and with it, come questions about how to better prepare for next year. Now is the time to implement strategies to minimize your tax liability for the 2020 filing season. It’s also not too late to understand the ever-changing tax landscape as the fallout of the Tax Cuts and Jobs Act continues to settle, and businesses and individuals continue to make adjustments to their tax strategies.
WHAT RECENT UPDATES HAVE BEEN MADE TO THE TAX CUTS AND JOBS ACT OF 2017?
The SECURE Act, a part of the Further Consolidated Appropriations Act of 2020, was signed into law on December 20, 2019. Some highlights of this new legislation include the following:
WHAT RECENT UPDATES HAVE BEEN MADE TO THE TAX CUTS AND JOBS ACT OF 2017?
The SECURE Act, a part of the Further Consolidated Appropriations Act of 2020, was signed into law on December 20, 2019. Some highlights of this new legislation include the following:
- The change of the required minimum distribution (RMD) from age 70 ½ to 72.
- “Qualified birth” distributions allow participants to withdraw up to $5,000 penalty-free for qualified expenses associated with the birth or adoption of a child after December 31, 2019.
- Changes to the minimum distribution rules for beneficiaries
- Distributions from Section 529 plans can be used for qualified apprenticeship programs.
- Starting in 2020, the kiddie tax will revert to the marginal rate of their parents and not the estate/ trust tax rate.
HOW CAN I REDUCE MY TAXABLE INCOME?
The bonus depreciation on qualifying property, property with a class life of 20 years or less remains at 100 percent for 2019 and 2020. Because a technical correction was never released, qualified improvement property does not qualify for the 100 percent bonus depreciation, leading to the resurgence of cost segregation studies. Cost segregation studies help you claim the maximum amount of depreciation possible, and most accountants can help with this.
Also available is Section 179 Expensing For 2020. The expensing limit is $1,040,000.
The Research & Development (R&D) Credit is another opportunity for businesses to reduce tax liability. Companies from a wide range of industries and sizes can qualify for federal and state tax savings. A few of the activities that could qualify for the R&D Credit are:
The bonus depreciation on qualifying property, property with a class life of 20 years or less remains at 100 percent for 2019 and 2020. Because a technical correction was never released, qualified improvement property does not qualify for the 100 percent bonus depreciation, leading to the resurgence of cost segregation studies. Cost segregation studies help you claim the maximum amount of depreciation possible, and most accountants can help with this.
Also available is Section 179 Expensing For 2020. The expensing limit is $1,040,000.
The Research & Development (R&D) Credit is another opportunity for businesses to reduce tax liability. Companies from a wide range of industries and sizes can qualify for federal and state tax savings. A few of the activities that could qualify for the R&D Credit are:
- Developing new products or processes
- Enhancing existing products and processes
- Developing or improving existing prototypes and software
Your tax professional should be able to answer any questions you have regarding these programs and your specific situation.
MEET THE EXPERT
Tia Levanda, CPA, is a member of Warren Averett’s Tax Group specializing in multi-state tax returns and tax research and planning for clients in the retail, real estate and manufacturing industries. Reach her at 334-260-2308 or Tia.Levanda@warrenaverett.com.
MEET THE EXPERT
Tia Levanda, CPA, is a member of Warren Averett’s Tax Group specializing in multi-state tax returns and tax research and planning for clients in the retail, real estate and manufacturing industries. Reach her at 334-260-2308 or Tia.Levanda@warrenaverett.com.
