2020 Year-End Tax Guide

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THE MARCUM 2020 YEAR-END TAX GUIDE

2020 Year-End Tax Planning Strategies for Individuals

In 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law. Changes included tax rate reductions for most individuals, a new deduction for owners of sole proprietorships and pass-through entities, an increased standard deduction, increase in child credits, an increase in the Alternative Minimum Tax (AMT) exemption, and limitations on or elimination of many other tax deductions. The IRS continues to release guidance and update tax forms to reflect changes enacted in the TCJA. Additional changes in tax law came into effect with the Coronavirus Aid, Relief and Economic Security (CARES) Act, signed on March 27, 2020. Several provisions of the CARES Act affect individual income tax returns.

The following summary outlines some of the significant planning opportunities now available to minimize individual tax obligations. CAPITAL GAINS Income from an investment held for more than one year is generally taxed at preferential capital gains rates. For 2020, the long-term capital gain and qualified dividend rates remain unchanged at 0%, 15% or 20%, based on statutory income brackets and adjusted for inflation. For example, the 20% rate applies when taxable income exceeds $496,600 (married filing joint), $469,050 (head of household) or $441,450 (others). Consider holding capital assets for at least 12 months, as short-term capital gains are taxed at ordinary income rates. X Consider gifting appreciated stock or mutual fund shares to relatives in a lower income tax bracket (such as children or grandchildren), who may pay less or no tax on the long-term capital gains when the shares are sold. X Consider selling unrealized loss positions in your investment portfolio to offset capital gains recognized earlier in the year. Planning Opportunities: X