Right now, you may be walking in a winter wonderland on the heels of the “most wonderful time of the year.” However, soon enough, spring will be here, which means Uncle Sam will be waiting for your tax return. But don’t worry, tax time can be a second Christmas of sorts for you if you know how to minimize your tax liability in 2020, according to TaxAudit, a tax audit representation and defense service leader. Here are a few tips for saving money on your taxes under the second year of the new Tax Cuts and Jobs Act.
For starters, it is a good idea to look at your with holdings, as they may need adjusting. The Internal Revenue Service offers a withholding calculator that will help you to figure out if your chosen with holdings are too low or too high. If they are too low, you could receive a surprise tax bill during the tax season, as many people did in the spring of 2019.
Also, consider paying off your hefty medical bills. The health care expense deduction was decreased to 7.5% for 2017 as well as 2018, but it is now 10% for the 2019 tax year. In light of this, if you’ll be doing deduction itemizing in 2020, try to pay for unreimbursed health care expenses in December instead of putting this off to next year. Your wallet will thank you for it.
Furthermore, consider giving a few more “Christmas” gifts in 2019 by donating to the charities that are most important to you. This is particularly important if you’ll be itemizing in 2020. Note, though, that if the standard deduction available to you is larger than the itemized deductions you produce, you won’t receive an extra benefit from doing this. A tax expert can help you to understand how all of the above mentioned moves will impact your unique tax situation in the new decade.