Tips on How to Lower 2020 Taxes, from T. Rowe Price

Most tax related activity had to be completed by year’s end to affect taxable income for 2020; however, there are a few ways investors can still reduce their taxable income for last year, according to investment management firm T. Rowe Price.

Some general considerations for investors include:

Contributions to IRAs, spousal IRAs, SEP-IRAs, and HSAs may be fully or partially deductible for tax year 2020

These “above the line” deductions are allowed whether you use the standard deduction or itemize your deductions

Certain households may also benefit from a saver’s tax credit

“If you haven’t taken full advantage of your 2020 tax deductions, now’s the time to act,” said Judith Ward, CFP, senior financial planner at T. Rowe Price. “Determine what type of contributions you’re eligible for, along with what works best for your overall financial plan. Saving as much as you can now may provide a tax break today, while also granting you valuable time to allow your investments to grow for the future.”

The detailed tips can be found at https://www.troweprice.com/personal-investing/resources/insights/save-money-today-how-to-lower-your-taxes.html.

With the recent extension of the 2020 federal tax return due date to May 17, 2021, it is possible that the IRS will provide further guidance to also extend the 2020 IRA contribution and other deadlines. See irs.gov for more details. 

Please note that each state establishes their own deadline for paying and filing state income taxes.   

Copyright Today’s Credit Unions