Archives for December 2020

 

Several important tax changes to the deductibility of charitable contributions have occurred as a result of the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

1. All taxpayers, regardless of whether you itemize or use the standard deduction, can deduct $300 as an “above the line” reduction of net income for 2020.
2. If you itemize your deductions and use the charitable deduction as part of your total itemized deductions strategy, in year’s past you were limited in how much you could deduct each year to 60% of your adjusted gross income. In 2020, you can deduct up to 100% of your adjusted gross income and can carry forward the balance.
3. Donation of amounts from IRA’s. If you are taking distributions from your IRA, you can donate amounts directly from your IRA’s to a charity. You will not receive a tax deduction in this transaction, but you also will not have to claim the distribution as income. This is a way to draw down or reduce your balance in your IRA’s, possibly reducing future RMD’s (required minimum distributions) give to a charity and not have to pay tax on the distribution.
If you have any further questions, feel free to call our office 870.364.8992 or e-mail me at craig@maxwellcpa.com

#CARES #taxtips #CPA

 

Farmers have several opportunities to reduce their taxes if they keep good records and carefully track their expenses. The tax savings can save them approximately 30% or more off their taxes paid. Some of the most commonly missed items are:

1. Failure to take advantage of accelerated depreciation on farm equipment purchased. Using these methods the farmer can write off the full value of the equipment purchased in the first year. A substantial tax break.
2. Conservation expenses are an area of significant tax savings which include expenses such as land leveling and drainage work.
3. Tenant living expenses for hired labor
4. Home office expenses
5. Costs of cell phones, and vehicle expenses.
6. Retirement plans. You can set us a Simple IRA or a SEP account, deduct these amounts against your taxable income and build a retirement plan for your future
7. Farm lease payments
8. Farm insurance payments
9. Maintenance and repairs
10. Other commonly missed expenses:
– Legal fees
– Crop scouting
– Dues to co-ops
– Hired labor
– Interest on loans
– Tax preparation, bookkeeping and advice.

Our Firm works exclusively with farmers, as their bookkeeper and tax experts. Please feel free to call for a free consultation at Maxwell CPA at 870.364.8992 or visit our website at www.farming-cpa.com