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2020 Year-End Tax Planning Tips for Businesses & Individuals

Use current losses for quick refunds

 

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COVID-19 brought financial challenges to much of the public and forced companies to reimagine how business is done. Congress responded with generous relief, much of which runs through the tax code. National tax and accounting firm Grant Thornton LLP has developed guides to help businesses and individuals with their year-end tax planning.

“Year-end tax planning is more important than ever this year,” said Renato Zanichelli, national managing partner of Tax Services at Grant Thornton. “Businesses both large and small have been dealt a tough hand. Having the right tax strategy will help businesses navigate this time of historic disruption and put them on the right track as a new year begins.”

“Lawmakers dedicated trillions of dollars to keep families and businesses afloat, but those provisions may also require quick action, in many cases by the end of this year,” added Dustin Stamper, managing director in Grant Thornton’s Washington National Tax Office. “The government wants to get money in the hands of those who need it, and many of the most generous provisions are tax changes that provide welcome liquidity for businesses and timely relief for individuals.”

Here are key tax considerations for year-end planning for both businesses and individuals:

Business year-end tax-planning considerations:

  1. Accelerate AMT refunds. When the Tax Cuts and Jobs Act (TCJA) repealed the corporate alternative minimum tax (AMT), it allowed corporations to claim all their unused AMT credits in the tax years beginning in 2018, 2019, 2020 and 2021. The Coronavirus Aid, Relief, and Economic Security (CARES) Act accelerates this timeline, allowing corporations to claim all remaining credits in either 2018 or 2019. This gives companies several different options to file for quick refunds. The fastest method for many companies will be filing a tentative refund claim on Form 1139, but corporations must file by Dec. 31, 2020 to claim an AMT credit this way.

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Source: CPA Practice Advisor

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