Expert Contributor by Jack Del Pizzo, CPA Del Pizzo & Associates
Highlights of Legislation Impacting Your 2020 Income Taxes Included in the massive legislation passed by Congress in 2020, to address the financial impact of the COVID-19 pandemic, were a number of tax breaks that caused taxpayers a great deal of confusion. As the May 17 tax-filing deadline approaches, here’s some Q&A about 2020 tax returns. Q: What can I do to reduce my 2020 income tax? A. If you’re eligible for a traditional IRA in 2020, you can make a maximum tax-deductible contribution of $6,000 plus, based upon your age, an extra $1,000 catch-up contribution. The IRA must be set up and funded by May 17, 2021. Even if only one spouse has wages or self-employment income, both spouses may be eligible for a separate contribution.
If you claim a standard deduction instead of itemizing deductions, you’re eligible to deduct $300 in charitable contributions you made during 2020. If you itemize deductions, your cash contributions to most charities during 2020 are deductible up to 100% of your income. (The previous limitation was 60% of your income.) If you have business or rental income from a sole proprietorship or a pass-through entity such as a partnership, an LLC or an S corporation, remember to claim the qualified income deduction of 20%.
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