With the new stressors and changes that 2020 brought most people, it is no surprise that tax planning took a back-burner for some people. Have no fear! Even though 2020 has come and gone, there are still a few things that you can do to help your 2020 tax situation.
- Contribute to College Savings Iowa Accounts
You have until the due date of the Iowa return (April 30, 2021) to make a contribution to your College Savings Iowa account(s) and still take the deduction on your 2020 Iowa tax return. The maximum contribution is $3,439 per beneficiary account. So, if you have 2 children, and both you and your husband want to contribute the maximum amount, that is a tax deduction on Iowa of $13,756! What a boost to your kid’s college savings!
- Contribute to Your IRA
You have until April 15th to make your IRA contribution. The maximum contribution is $6,000 per person. If you are over the age of 50, you can add an additional $1,000. After you decide if you want to make a traditional IRA contribution or a ROTH IRA contribution, be sure to review the qualifications to be sure you are eligible to make the contribution and if it is tax deductible for you.
- Contribute to Your Health Saving Plan
You also have until April 15th to make your HSA contribution, but the plan has to have been set up before the end of the year. The maximum contribution is $3,550 for self only or $7,100 if family coverage. There is an additional $1,000 contribution allowed for those over 55 years of age.
- Get Organized
By organizing your documents, you can make sure you have included all the business and tax deductions that are allowed. Be sure to look at all banking accounts as well as credit card statements to make sure you are including all items. Did you know that you can deduct credit card expenses even if you have not paid the credit card bill before the end of the year? Also, don’t forget your mileage log. If you do this now, instead of waiting until April, you will be more likely to pick up more expenses.
- Ask Questions
If you have doubts about what is deductible, ask your tax advisor so that all deductible items are included. If your tax advisor sends out a list of questions with your tax organizer, be sure to read through them to see what questions you might apply to your situation.
These are just a few ideas that might still help your 2020 tax situation. And remember “Better late than never!”
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Located in West Des Moines, Iowa with a branch office in Winterset, Iowa, McGowen Hurst Clark Smith (MHCS) celebrates 70 years of extending excellent service to our clients, providing them with accounting, auditing, consulting and financial planning expertise.
Established in 1946, our staff has grown from 3 to 60 employees, making us large enough to provide our clients with a broad base of experience and resources, yet small enough to offer very personalized service—which we feel makes us stand apart from other CPA firms. In addition to the traditional services of Accounting, Tax Preparation, Audit and Business Consulting, MHC&S offers our clients specialized services including Estate Planning, Business Valuations, Cost Segregation Studies, Retirement Planning, QuickBooks Training, Financial Advisory Services, Fraud Detection and Deterrence, Business Succession Planning, Litigation Support and more.
MHCS is a member of CPAmerica International, Inc., a national association of accounting firms offering membership to only 90 firms throughout the United States. This association offers a wide pool of additional technical expertise to the members firms, as well as continuing professional education necessary to maintain the degree of excellence which MHCS feels is vital in today’s business environment.