What’s happening with deductions in 2020?
The standard deduction has once again been increased for inflation. The 2020 amounts for separate filers is $12,400 and for joint filers is $24,800. Itemized deductions are more beneficial if taxpayers ‘bunch’ deductions into one year. The itemized deductions that may be able to be shifted from year-to-year are real estate taxes, state income tax estimates, and charitable contributions. An example of this would be paying your 2020 and 2021 real estate taxes in the same year. This bunching strategy needs to be discussed with your tax advisor to be most beneficial. Also need to remember there is a $10,000 cap on the amount of property and income taxes you deduct.
If you don’t itemize deductions, normally you can’t deduct charitable donations. But, the CARES Act allows taxpayers who claim the standard deduction to deduct up to $300 of cash donations to qualified charities in 2020.
Here’s a Tip: If you know you’re not going to have more than the standard deduction, then don’t worry about gathering the itemized deduction documentation and turning them into your CPA.
As a reminder, Itemized deductions consist of the following: medical expenses, sales and real estate taxes, mortgage interest, charitable contributions. Talk to your CPA if you have any questions on what may qualify.
-Single Standard Deduction $12,400
-Married Filing Jointly Deduction $24,800
Tax expert, Abby Norville, CPA, gives a timely overview on year-end tax planning for deductions. Watch the video to learn more on key information for itemized deductions.