Hope you and your family are staying safe and enjoying the last few weeks of what’s been an unforgettable year.
I wanted to quickly touch base a few ways you may be able to reduce your 2020 tax liability before the year ends. From a tax perspective, there’s an enormous difference between doing something on December 31 and doing it one day later.
- Fund your FSA: The IRS allows you to send tax-free dollars from your paycheck to your flexible spending account (FSA) every year. If your employer offers one, you might want to take advantage of it to lower your tax bill. For 2020, you can send up to $2,750.
- Save for college: If you have grandchildren or little ones underfoot, consider contributing to a 529 plan. While you won’t be able to deduct your contributions on your federal income taxes, you might be able to on your state return (if you contribute to your state’s 529 plan).
- Send money to your 401(k). The IRS doesn’t tax what you redirect from your paycheck into a 401(k). For 2020, you can funnel up to $19,500 per year. Keep in mind, if you’re 50 or older, you can contribute an extra $6,500 in 2020.
- Donate to charity: For 2020, you can deduct cash contributions up to 100% of your adjusted gross income on an itemized 2020 tax return. But remember, donations don’t have to be cash. If you donated clothes, food, or other household items (and have a receipt to prove it), those things could lower your tax bill.
- Document medical expenses: If you’ve been in the hospital or had other costly medical or dental care, you can deduct qualified medical expenses that are more than 7.5% of your adjusted gross income.
Happy to discuss which if any of these may be applicable for you – just let me know if you want to jump on a quick call.
This material is intended for informational purposes only and should not be construed as legal, accounting, tax, investment, or other professional advice. Trademark Capital’s investment strategies are built using quantitative, proprietary algorithms that are designed to identify and react to changing market conditions. However, investors should be aware that no investment strategy or risk management technique can guarantee returns or eliminate risk in any given market environment. As with all investments, Trademark Capital Management’s investment strategies are subject to risk and may lose money. The investment strategies presented are not appropriate for every investor and individual clients should review with their financial advisors the terms and conditions and risk involved with specific products or services. Due to our active risk management, our managed portfolios may underperform during bull markets. Past performance is no guarantee of future results.