Loopholes of your 2020 tax return. Plan for them now!
Energy credits for home and vehicle:
(IRS source)?Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles, including passenger vehicles and light trucks. For vehicles acquired after 12/31/2009, the credit is equal to $2,500 plus a car that draws propulsion energy from a battery with at least 5-kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt-hour of battery capacity over 5-kilowatt hours. The total amount of credit allowed for a vehicle is limited to $7,500.
Higher Education Interest
(IRS source)?Student loan interest is the interest you paid during the year on a qualified student loan. It includes both required and voluntarily pre-paid interest payments. You may deduct the lesser of $2,500 or the amount of interest you paid during the year.
Common business deductions:
- The home office deduction
- Health insurance deduction (variations and conditions apply)
- Continuing education deduction
- Vehicle expenses
- Retirement accounts
- Insurances required for your business
- Your bank interest
- Supplies you use
- Hardware you use to maintain your office, your business assets, or place or business.
- Cost of internet and phone used in your business (percentage or the whole amount)
- Travel for business purposes, meals.
- Advertising
- Legal fees
- Some taxes
- Dues and memberships
- Contract labor
- Employee deductions
Home Mortgage Interest and Acquisition Debt
(IRS source)?The itemized deduction for mortgage insurance premiums is extended through 2020.
You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness.
Debt Relief on Home or Other Loans- new law!
(IRS source) Tax relief for instances when a lender forgives mortgage debt. This exclusion now allows some taxpayers who’ve had mortgage debt forgiven to exclude the canceled amount from their income for federal tax purposes through the year 2020.
Home Health Care
can be Tax-Deductible.
Child Care Credits
- The Child Tax Credit is up to $2,000 per qualifying dependent child 16 or younger on 12/31/2020.
- A $500 nonrefundable credit for qualifying dependents other than children.
First-Time Homebuyer Credit
- Even though the IRS does allow first time home buyer credits, the first-time homebuyer program offered by your state may still be available.
- First-time homebuyers may be able to withdraw IRA funds for housing-related costs penalty-free.
- The first-timers can take advantage of tax deductions on mortgage interest and energy credits.
- Former Vice President Joe Biden proposed a $15,000 tax credit to assist first-time homebuyers.
Deductible legal fees
- Legal fees related to your business can be deducted. No matter what the outcome of the case is.
- Fees for tax problems resolutions,
- Preparation of individual tax return or a portion related to your business tax return,
- Fees for rentals that produce income or loss,
- Fees related to farm income or loss,
- Fees related to whistleblower claims or discrimination claims (associated with your workplace).
- You may be able to deduct legal fees related to adopting a child.
(IRS source)?IRS finalizes regulations for 100 percent bonus depreciation
September 21, 2020
WASHINGTON ? The Treasury Department and the Internal Revenue Service today released the last set of final regulations PDF implementing the 100% additional first-year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the company.
Gift and Estate tax rates
- The unified federal gift & estate tax exemption for 2020 is $11.58 million.
- The tax rate is flat 40%.
Foreign Earned Income Exclusion
The maximum exclusion for 2020 is $107,600 per person.
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