Tax Season is just around the corner! That could mean a lot of paperwork and stress…
We invited one of our favorite Tax Professional, Steven Hamilton II, EA., to share his SECRET tax deductions for 2020.
1. Take Advantage of Any Pre-Tax Deductions! There are pre-tax child care deductions and also retirement account contributions. Retirement Accounts such as IRA, 401(k), and Roth IRA are all great vehicles for tax savings while putting your hard-earned money to work!
2. If you’re a W-2 Employee and your Spouse is Self-Employed… There are tax planning strategies that allow for deductions such as medical expenses. Talk to your accountant about medical expenses reimbursements.
3. Home Office Tax Deductions: You can deduct your home office expenses such as computers, office supplies, part of the internet usage expenses, etc. Most individuals don’t know how to fill out the form correctly! Make sure you have a tax professional to help you!
4. If you have a Corporation or you’re a W-2 Employed Worker… Find out if you’re getting reimbursed for expenses. Make sure you create an actual expense reporting.
5. Take Advantage of Contributions to the IRA There’s a secret contribution method called the “Backdoor IRA” which involves in contributing into a traditional IRA then roll those over into a Roth IRA
6. Mega Backdoor Roth IRA – Using a company 401(k), you can contribute larger after-tax amounts to a 401K and then converting those amounts to a Roth IRA. That allows you to contribute $56,000 into a 401(k) Plan
7. Homeownership – You can deduct your mortgage interest and potentially your property taxes. You can use your home as a place of meeting or an event for your business. Take advantage of these loopholes.
8. Business ownership: This can mean driving for Uber, Lyft, or even hosting for Airbnb. You have to have a profit from the business. There are a ton of tax deductions in the world of business ownership.
9. Investing in Rental Properties: You can create income and wealth through rental properties but you can do a lot more of tax deductions through rental properties.