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Take Advantage of Year-End Tax Tips by December 31 to Save

A combination of CARES Act measures and changes under the TCJA translate into year-end tax tips that can save you money. But don’t delay – you have to act by December 31 to take advantage of some of these strategies.

Charitable Donations

In the past, only taxpayers who itemized could deduct their charitable donations. But this year everyone can take a deduction for donations up to $300. Charities are only required to give receipts for donations over $250. So if you don’t give your entire $300 donation to one organization, be sure to keep good records. And be sure to donate by the end of the year!

Use Current Losses to Get Refunds On Past Returns

The CARES Act allows you to use losses from 2019 and 2020 and apply them against taxes you paid in 2018 and earlier. This allows you to effectively reduce the amount of tax you owed and get a quick refund.

The fastest way to get a refund is to file a tentative refund claim. If you want to carry back a net operating loss from 2019, you must file that claim by December 31, 2020. If the losses will be from the 2020 tax year, the earlier you file your tax return the better – you can’t get a carryback refund until you file your return.

Bonus Depreciation

Bonus depreciation means you can deduct up to 100 percent of the cost of qualified property. That includes heavy equipment, some vehicles, furniture, manufacturing equipment and more. If you make a purchase by December 31, you can take advantage of bonus depreciation.

Qualified property also includes “qualified improvement property” (QIP). That covers renovations and other improvements you make to non-residential property you own or lease after the building was first constructed. A rule change to the QIP provision makes the bonus depreciation retroactive to QIP going back to January 1, 2018. You can file an amended return for 2018 and 2019 for improvements made in those years for a relatively quick refund.

Missing Stimulus Check?

Did you miss out on getting a stimulus check coming via the CARES Act this spring? Good news: the $1,200 will still find you, but via your 2020 tax return. The stimulus check was basically the advancement payment of a tax credit – which normally goes toward paying your taxes. So that $1,200 will go toward your tax bill, or add to your refund!


Accounting Today has an article with some additional year-end tax tips.

The IRS has a link to its rules on bonus depreciation.

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