Tax Planning Tips from SFS Tax

helpful tax planning tips

Hello Fellow Taxpayers,

Since I missed writing my weekly email over the past couple of weeks, I’m catching up. How about tax planning tips?

As we near the end of another year, it is time to talk about year-end income tax planning. In the last two years, we have seen many individual tax changes. There were some changes made that may have reduced certain tax deductions, increased others, and dramatically changed your tax return. There are still several tax planning tools available, and in this email, I will remind you of a few.

Immediate AND long-lasting planning tips:


  • If your employer offers a 401-k plan, America’s #1 tax shelter continues to be deferring the maximum amount the IRS allows to your 401-k this and every year. Because employers are required by law to match a portion of your deferral, this is a tax deduction with free money!
  • The Kaiser Family Foundation reports this year that: 41% of American W-2 employees will be covered by a health savings account at work. If your employer does not deposit the maximum amount allowable into this plan; you have until April 15, 2020, to add the remaining amount (up to the 2019 maximum) to this. The 2nd best tax planning move of all time.
  • Remember that your Social Security benefit is based on your highest 35 years of earning. So, taking some time away from the workforce, or aggressively writing off business expenses can have a long-term adverse effect on retirement.

Saving money on Medical

  • Some employers allow you to deposit your health savings account amounts through a cafeteria or 125 plan. If available to you, this is the best way to put your own money in because of the additional tax savings available by avoiding Social Security tax. You are probably too late to do much for this year but make this your 2020 New Year’s resolution.

Charitable Giving

  • Fewer Americans are now able to itemize deductions because of the considerable benefit received from the increased standard deduction. That doesn’t mean that you still can’t do anything. One simple tool to get the best “bang for your buck” would be to practice what we call bunching of charitable contributions. This trick guides you to make charitable contributions every other year. That way you double up and get a deduction in some years without giving it up in others. Simply make your 2020 contributions as early as possible in 2020, and then make your 2021 contributions at the very end of 2020. So you “bunch” all your amounts in one year to potentially get the best-itemized deduction amount.
  • If you are over 70 and ½ and have an IRA, you should not be writing checks to charities. Instead, you should be using the “Direct IRA to charity” tool to avoid tax issues while qualifying for the required distribution rule.

Unreimbursed Employee Job Costs

Because there are no longer any deduction for work-related expenses, you must carefully read your employer’s handbook to see if they offer a reimbursement program for job-related expenses like licenses, dues, uniforms, supplies, etc.


  • If you are considering selling some old stock investments, you might want to consider giving them directly to a charity. Avoid writing checks to charities because you can deduct the full fair market value of the stock you give away in most cases.
  • We continue to worry about unreported foreign investments. We suggest you carefully consider whether you have control over a foreign checking account or hold stock outside the United States. These must be reported, or they essentially face a 50% penalty for each year.
  • One of our annual overall planning tools is to advise “debt-free at 65”. This life-long goal is a basic element of financial and tax planning that is continuously overlooked in today’s era of 30-year mortgages and cheap refinancing options. With the much reduced itemized deduction availability of home mortgages, it is more potent than ever!


Additionally, this year, the IRS and Congress have become very concerned about crypto-currency (like Bitcoin). You must be sure to report any of these transactions. There is even a new question on every tax return asking about it. In the recently issued draft Schedule 1, the IRS specifically asks if you have any Cryptocurrency. All tax preparers “should” (I will) ask this question as there may tax consequences.

If you are considering: retirement, starting a small business, selling an investment, or a business or a college savings program, we strongly suggest you contact us for a planning meeting. Or for any of the ideas discussed in this email. There are some items you can take care of after January 1 in any tax year; such as making an IRA contribution. Most of these have to be done before the close of the tax year. Hope these tips were helpful to you.

So until next time,

C Ya
Jeffrey “The Guru of Year-End Tax Planning” Schneider

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