Part 1

The leaves are now full of color. Kids are back to school. A new year is right around the corner.

It is time to consider your year-end tax planning? We know that the changes under the Tax Cuts & Jobs Act (TCJA) as well as additional changes that may occur as a result of the 2020 elections may be weighing heavily on your mind when it comes to their impact on future income tax rates.

While we certainly can’t tell the future, these strategies will help you to enter your tax planning with a little more confidence than you had yesterday.

Moving income to 2020 and paying more of your bills this year

If you don’t expect to be in a higher tax bracket next year, deferring income into the next tax year and paying expenses in the current tax year is a tried-and-true technique. If you’re an independent contractor or other self-employed individual, you may opt to hold off on sending invoices until late December to push the associated income into 2020. However, all taxpayers, regardless of employment status, can defer income by taking capital gains after January 1. However, keep in mind that waiting to sell increases the risk that your investment’s value will decrease. Moreover, taxpayers who are eligible for the qualified business income (QBI) deduction for pass-through entities — sole proprietors, partnerships, limited liability companies and S corporations — could end up reducing the size of that deduction if they decrease their income. You may also opt to maximize the QBI deduction, which is scheduled to end after 2025. 

For more information on how to do this schedule an appointment with our office 910-212-4881.