The arrival of 2021, however welcome, strongly impeded most Americans’ efforts to reduce their 2020 tax bills. The window on things like making charitable donations or obtaining capital losses to offset gains has closed up on December 31st.
But there are still some things people can do now to cut taxes from last year. Several involve contributions to retirement accounts, with terms up to October 15. Another could reduce penalties for those who delayed last year’s tax payments.
Of course, it is not so clear when the 2020 taxes will be due, which affects some of these deadlines. Federal Revenue Commissioner Charles Rettig said he wants to stay with April 15, but some in Congress and professional groups like the American Institute of CPAs are calling for a postponement due to pandemic interruptions. For Texas and Oklahoma residents and business owners, the April date has already been postponed to June 15 due to February’s violent storms.
The clarification is likely to come soon. Whether the April due date is late or not, here are the steps archivers can still take to reduce 2020 bills for Uncle Sam.
Contribute to a traditional IRA
Many taxpayers can contribute up to $ 6,000 to a traditional individual retirement account or a Roth IRA for 2020 – but only one contribution to a traditional IRA will cut taxes in 2020. The maximum is $ 7,000 for people aged 50 and over, and there is no age limit for who can contribute.