Author: Kienitz Tax Law

kienitz end of year tax time 2021

2021 Tax Plan: End of Year Tax Planning for 2020

2020 has been quite the year. While it may have felt like the year of the coronavirus would never end, it’s December, which means it’s time to reexamine your tax situation and decide if some changes are in order. This blog post will examine a few tips when you start planning for the 2021 tax season.

Tip #1: Make a Charitable Donation – in Cash

Fewer taxpayers itemize their deductions these days, which means fewer taxpayers are taking advantage of the charitable tax deduction. But due to the coronavirus, Congress passed the CARES Act, which has a special provision that allows for a $300 above-the-line deduction for cash donations to eligible charities.

Tip #2: Consider Modifying Your Tax Withholding

If your W-4 tax form wasn’t accurately filled out last tax season, you might have found yourself with a nasty surprise when you filed your 2019 taxes earlier this year. If you’re afraid of making the same mistake, you can use the Tax Withholding Estimator offered by the IRS to see if your employer has been withholding enough of your paycheck this year.

If it shows that you need to increase the amount of taxes withheld from each paycheck, you still have time to complete a new W-4 tax form and add an extra withholding.

Tip #3: Maximize 401(k) Retirement Contributions

Given the financial struggles many individuals encountered because of the coronavirus, they may not have been able to take full advantage of the tax-deductible contributions made to a 401(k). This is especially unfortunate because of the higher contribution limits that went into effect this year.

So if you’re lucky enough to have a little bit of extra cash sitting in an account towards the end of the year, and you haven’t maxed out your 401(k) tax-deductible contributions, think about increasing them before the year is over. 

Tip #4: Harvest Your Tax Losses

Before the year is over, look for any securities you are holding where you are currently in the red. If you think it is a good time to sell that stock and take the loss, you will be able to use a certain portion of that loss to reduce any capital gains you may have. But there are two things to remember about this strategy.

First, don’t use the desire for this tax benefit as a reason for selling a security that you know will be smarter to hold on to.

Second, after you sell a security for a loss, you can’t quickly turn around in 2021 and buy it back. There are special “wash rules” that will negate this tax benefit if you do this.

Tip #5: Go to the Doctor

Going to see a doctor or other medical professional in December isn’t a tax benefit by itself. But if you have a flexible spending account to use to help pay for medical expenses, try and take full advantage of them before the year ends. 

In most plans, the money in a flexible spending account will be lost at the start of the new year. While some plans allow a limited amount of money to roll over into the next calendar year, not all plans enjoy this benefit.

when and why you need to hire a tax attorney

When and Why You Need to Hire a Tax Attorney

The tax laws and regulations in the U.S. can be confusing and frustrating at times. On occasion, this will result in taxpayers getting into trouble with the IRS. But not all disputes or tax questions require the help of a tax attorney. This blog post will examine situations when hiring a tax lawyer might be useful and the reasons for using a tax lawyer’s services.

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kienitz tax law What Happens When You Owe the IRS and Don’t Pay

What Happens When You Owe the IRS and Don’t Pay?

For the most part, we can’t get away with not paying our taxes. So what happens when you don’t pay your taxes when they are due? Does an IRS agent come to your bank and take money from your bank account? Or do you get a letter in the mail a month later saying the IRS has a lien on your property?

Both situations are possible, at least to some degree. However, a lot can happen from the moment a tax obligation comes into existence and the IRS takes action against you.

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Common Questions About the CARES Act Economic Impact Payments

Common Questions About the CARES Act Economic Impact Payments

One of the most talked-about provisions in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) have to do with the economic relief checks for many individuals and families. But despite the CARES Act becoming law in March 2020, not all eligible payment recipients have received their money.

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kienitz tax law how the cares act impacts your taxes

How the CARES Act Impacts Your Taxes

At roughly $2 trillion, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is the largest economic emergency relief package this country has ever seen. And there are currently talks about a CARES II relief package in the works in Washington, D.C.

Regardless of whether or not we get another economic relief bill signed into law, the CARES Act still has tremendous implications on the individual and business taxpayer. This blog post will go over a few of those tax-related provisions.

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kienitz coronavirus tax scams

Coronavirus Tax Scams

As you already know, Congress recently passed the largest emergency financial stimulus package in the history of the United States. Officially called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), this law provides, among other things, cash payments to Americans. The IRS will administer this process, which creates the potential for various tax scams.

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kienitz irs scam

How Do You Know if the IRS Is Calling?

With your tax refund check excepted, no news is good news when it comes to the IRS. This means that for the most part, any communication received from the IRS is probably not a good sign. In fact, anytime you hear from the IRS, your heart will probably sink. That’s because you probably fear it’s the start of an audit, a request for back taxes or some sort of notice of an action against you.

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