1) If you are thinking about buying larger items such as furniture, appliances, computers, fence, etc., you may be better off buying them before the end of the year. A deduction this year is generally worth more than waiting to get the deduction in a future year.
2) Stock up on business supplies and toys for next year by purchasing them this year. Such supplies can include: arts and crafts supplies, cleaning supplies, kitchen supplies, curriculum materials, etc. If you pay by credit card for an item purchased this year, it’s considered an expense this year, even if you don’t pay the bill until next year.
3) You can deduct 100% of the costs associated with expenses related to COVID-19. This includes gloves, masks, cleaning supplies and more. If you stock up on these items in 2020, you can deduct them this year.
4) Ask parents to pay you next year for any remaining child care payments they owe you for this year. Money you receive next year for child care delivered this year is reported by you as taxable income on your next year’s tax return, not this year. If a parent gives you a payment check on December 30th, but you don’t deposit it until next year, it’s still considered income to you in this year (the date you received the check).
5) Make a contribution to an IRA. You can set up a Traditional IRA or SEP IRA before April 15, of next year. Any contributions you make to these IRAs before then will reduce your personal taxable income.
If you set up or contribute to a ROTH IRA you won’t reduce your taxes this year, but you will save money later when you withdraw the contributions at retirement.
If you have set up a SIMPLE IRA before October 1 of this year, you can make a contribution to it before April 15th of next year and reduce your personal taxable income.
6) If you make contributions to a charitable organization before the end of the year, you may be able to reduce your personal taxable income if you are able to itemize your taxes.
Tom Copeland – www.tomcopelandblog.com
Image credit: https://pixabay.com/illustrations/new-normal-face-mask-covid-19-5659041/