Dear Clients and Friends,
This year has brought a host of challenges to both individuals and businesses. As the year closes, we want to highlight a few tax-relief provisions Congress has enacted and suggest planning ideas that might help you lower your tax liability.
Coronavirus Aid, Relief, and Economic Security Act (C.A.R.E.S. Act) Tax Items to Consider:
- 2020 required minimum distributions from retirement plans were eliminated and taxes on up to $100,000 COVID-19 related distributions from IRAs can now be spread over 3 years.
- Charitable deduction limit increased for 2020
- Paycheck Protection Program (PPP) loans were created with generous forgiveness provisions for small businesses. To the extent the loan is forgiven, expenses paid are not deductible for 2020.
- Excess business loss limitations lifted retroactively from 2018 – 2020
- Expanded 5-year Loss Carryback for individuals and businesses and temporary removal of 80% limitation for losses carrying forward
Other Tax Items to Consider:
- Estate Planning & Year End Gifts:
- The lifetime Federal Estate/Gift Exclusion amount is $11,580,000 (see potential changes for 2021)
- The annual gift limit remains at $15,000 per recipient
- President-elect Joe Biden has proposed a tax plan that could lead to significant changes to current tax law. While these tax changes would need to be passed through Congress, it may be helpful to be aware of what has been proposed.
- 2021 City of Seattle payroll tax – Beginning January 1, 2021, the City of Seattle will impose a payroll expense tax on each business within Seattle with $7 million or more in Seattle-based payroll in 2019
- 2022 Washington Long-Term Care Trust Act employee payroll tax: – Short-term care benefit, publicly funded by a 0.58% payroll tax on all wages and remuneration, withheld quarterly by employers
See Addendums Included for Further Information:
- Addendum A: General Tax Strategies for Individuals
- Addendum B: General Tax Strategies for Business Owners
- Addendum C: President-elect Joe Biden’s Proposed Tax Plan
We would be happy to schedule a call or virtual meeting in the next few weeks to assist you in any additional way that we can.