Loan Officers: Make These Tax Planning Moves Before January 1December 7, 2020
The tax year is coming to a close. Though there are changes in tax law every year, these past couple years have seen significant changes. Thats’ why we are sharing some important information for loan officers below.?
To Itemize or Not to Itemize?
Under the Tax Cuts and Jobs Act, the percentage of filers taking the standard deduction has as opposed to itemizing deductions with a Schedule A has risen to 90 percent, and for good reason: State and Local Tax (SALT) is now capped at $10,000. The base standard deduction for single filers is $12,200 and $24,400 for married couples filing jointly.
Review Qualified Business Interest Deductions
The qualified business income (QBI) deduction, also known as the section 199A deduction, allows many individuals, owners, sole proprietorships, partnerships and S corporations to deduct up to 20 percent of their QBI, plus 20% of qualified real estate investment trust (REIT) dividends.
Everything you need to know about Qualified Business Interest Deductions can be found here.
Note Deduction Changes
There were many changes in the past two years about what you can and cannot deduct. For instance, you can no longer deduct business entertainment expenses, like buying a potential borrower a cup of coffee. If you own a brokerage and have been reimbursing employees for their costs of commuting to work, those reimbursements are no longer deductible. If you’re a sole proprietor or contractor, note that the IRS standard mileage rate has been updated. You can only deduct 58 cents per mile for business miles.
More deduction changes can be found here.
Check Deadlines for Retirement Account Contributions
If you have a Roth IRA or Traditional IRA, it can be opened and funded all the way to April 15th, 2020. But you can only contribute $6,000 a year. For SEP-IRAs, you may be able to contribute up to $56,000 for 2019 as late as October 15th, 2020 if you had filed an extension.?
Double Check Your Withholding
This one is pretty straightforward. Make sure you have withheld enough to ensure you get a refund or at least avoid a surprise tax bill. Use this withholding calculator to run the numbers if you are a W2 employee.?
“Harvest” Short-Term Investment Losses
Depending on your tax and investment situation, it may be beneficial to sell losing non-retirement investments before the end of the year so you can harvest the losses and reduce your tax bill. Each year you can realize up to $3,000 in short-term losses, which offsets up to $3,000 in regular income for tax purposes.
Report Crypto Gains or Losses Properly
The IRS has made a huge push to begin taxing cryptocurrency investments like Bitcoin as they treat other securities. It’s hugely complicated, but not impossible. Learn how to deduct cryptocurrency gains and losses here on the IRS website.
Lakeside: the preferred partner of lenders all over Maryland
At Lakeside Title, we are dedicated to providing top quality title services to lenders and brokers across Maryland.
As a lender, you need a title partner who can keep pace with your customer demand, both geographically and from a transactional volume perspective. We offer the technological systems to scale to fit the needs of all our clients. Our team of title professionals are experts in the many types of mortgage transactions. We will provide the services you need to keep your operations on track.
Call Lakside Title to find out about how we can help you close your loans quickly and efficiently.