It’s understandable if you’re more concerned about your 2020 tax bill than you are about your 2021 tax situation. That’s because your 2020 individual tax return is due to be filed in less than 3 months. However, it’s a good idea to familiarize yourself with tax amounts for this year. For example, the amount you have to earn in 2021 before you can stop paying Social Security on your salary has increased to $142,800 (from $137,700 for 2020). For 2021, you can contribute up to $19,500 (unchanged from 2020) to a 401(k) plan. You can contribute another $6,500 catch-up amount to a 401(k) if you’re age 50 or older. Contact us if you have questions or need more information.

One item of interest for small business owners in the Consolidated Appropriations Act (CAA) is the availability of a second loan from the Paycheck Protection Program (PPP). The recently enacted CAA permits some small businesses who received a PPP loan to take out a “PPP Second Draw Loan” of up to $2 million. To qualify, you must employ no more than 300 employees per physical location, have used or will use the full amount of your first PPP loan, and demonstrate at least a 25% reduction in gross receipts during any quarter of 2020 (as compared with the same quarter in 2019). Additional rules apply. Contact us with any questions you might have about PPP loans.

The IRS is opening the 2020 individual income tax return filing season on Feb. 12. (This is later than in the past because of a law that was recently enacted.) Even if you usually don’t file until closer to the April 15 deadline (or you file an extension), consider filing early. It can potentially protect you from tax identity theft. In these scams, a thief uses another person’s personal information to file a fraudulent return early in the filing season and claim a bogus refund. Another benefit of early filing is that if you’re getting a refund, you’ll get it faster. And if you were eligible for an Economic Impact Payment last year and didn’t receive it, you can claim it on your 2020 return.

Medical and dental costs are expensive and it’s hard to get a tax deduction for them. But you may qualify by including every eligible expense allowed. Here’s what it takes to get a deduction and how you might be able to benefit by moving certain expenses into 2020.

As we wind down 2020, be aware that December 31 is an important date when it comes to filing your tax return. Whether you’re married or unmarried on that date will affect how you file. Check out the 5 federal tax filing statuses and who can claim them.

Find out how the CARES Act may help you weather the COVID-19 pandemic.

If you’re self-employed and don’t have paycheck withholding, you probably have to make estimated tax payments. These payments must be sent to the IRS on a quarterly basis. The 4th 2020 estimated tax payment deadline for individuals is Friday, Jan. 15. Even if you do have some withholding from paychecks or other payments, you may still have to make estimated payments if you receive income such as Social Security, prizes, rent, interest and dividends. Generally, taxpayers send four equal installments. But people who earn income unevenly during the year (for example, from a seasonal business) may be able to send smaller payments. Contact us if you have questions about the estimated tax rules.