Here’s How You Can Lower Last Year’s Tax Bill
Consider these ideas before you file last year's return
Good news! Business taxpayers may still be able to take actions to lower their federal income tax liabilities for 2020, as well as for future years. Consider these ideas before you file last year's return.
Claim 100 Percent First-year Bonus Depreciation — Or Maybe Not
For qualifying assets placed in service in 2020, business taxpayers can deduct 100% of the cost in the first year. The 100 percent immediate write-off is allowed for both new and used qualifying assets, which include most categories of tangible depreciable assets.
Claiming 100 percent first-year bonus depreciation whenever it's allowed is usually considered a tax-smart move. But you should think twice about claiming it for 2020 additions if you anticipate higher tax rates in future years. In that case, consider forgoing bonus depreciation on last year's return and, instead, depreciate the assets in question over a number of years. That way, the depreciation write-offs will offset future income that you suspect might be taxed at higher rates. The choice to claim 100 percent first-year bonus depreciation for 2020 asset additions (or not) is made on last year's return.
Please select this link to read the complete blog post from OSAE Member VonLehman CPA & Advisory Firm.