Tax Planning Tips for 2021

Tax Planning Tips for 2021

December 8, 2020

We’re just weeks away from the end of 2020, which means it’s time for you to get prepared for filing your taxes in Union City, NJ before the April deadline.

We strongly recommend working with a tax preparation professional, especially if your work situation has changed throughout this year. For example, many people have spent a significant amount of time working from home this year, which may mean the opportunity for some new deductions that you didn’t qualify for in the past.

If you had any major life changes over the course of the year, this could also influence some different aspects of your taxes that could require some professional help.

Here are a few specific tips that are items you should take care of during the final quarter of the year to make sure you’re addressing your 2021 tax planning in Union City, NJ with plenty of time to spare.

  • Year-end deduction planning: The end of the year is the best time to go over the deductions you may qualify for, so you can get a better sense of your potential deductions and credits and start to estimate your potential tax refund or payments even before the end of the year.
  • Claiming existing deductions: If you still have 2019 tax credits or deductions you can claim, make sure you do so before December 31. Otherwise, you may lose the ability to take these deductions.
  • Qualified tax breaks: If you have any qualified tax breaks available to you, make sure you take them before December 31 so you can save money on your taxes. Otherwise, you miss out on the chance to save.
  • Get a checklist together: As we move into the new year, it’s a good idea to start forming a tax return checklist so you can begin crossing off items as soon as possible. Once you start to get your paperwork in the new year (including tax credits, W2s and other important forms), it will then be easier for you to track your progress, because you’ll already have a checklist prepared.
  • Go over last year’s return: Spend some time looking at last year’s tax return to see if there are any credits or deductions you are still qualified to take that you took advantage of last year. This could also give you some insight into potential new deductions for which you will qualify this year, perhaps for the first time.
  • Donate to charity: If you want to lower your taxable income and increase your deduction opportunities, the holiday season is a great time to donate to charity. This helps you spread some cheer and contribute to worthy causes while also benefiting you on your tax return.

While it’s understandable to not want to have to think about your taxes during the holiday season, spending at least some time getting yourself organized during November and December can set you up for a much smoother tax season come January through April. For more information and tips about tax planning for 2021 in Union City, NJ, contact Kedean’s Generation today.

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