A year-end approaches, this is a good time to think about planning moves that may help lower your tax bill for this year and possibly next.

New tax rules have been enacted to help mitigate the financial impact of the COVID-19 pandemic, some of which should be considered as part of this years’ planning, most notably elimination of required retirement plan distributions, and liberalized charitable deduction rules..

Higher-income earners must be wary of the 3.8% surtax on certain unearned income. The surtax is 3.8% of the lesser of:

(1) net investment income (NII), or (2) the excess of modified adjusted gross income (MAGI) over a threshold amount ($250,000 for joint filers or surviving spouses, $125,000 for a married individual filing a separate return, and $200,000 in any other case).

Taxpayers other than corporations may be entitled to a deduction of up to 20% of their qualified business income.

For 2020, if taxable income exceeds $326,600 for a married couple filing jointly, $163,300 for singles, marrieds filing separately, and heads of household, the deduction may be limited based on whether the taxpayer is engaged in a service-type trade or business (such as law, accounting, health, or consulting), the amount of W-2 wages paid by the trade or business, and/or the unadjusted basis of qualified property (such as machinery and equipment) held by the trade or business.

On November 3, Californians approved Proposition 19, a constitutional amendment which had important impacts on property taxes as well as estate planning.

There’s an old joke about a business executive who wants to fill an accounting position and asks each applicant, “How much is two plus two?” The job goes to the candidate whose answer is, “How much do you want it to be?”

It’s one thing to be disappointed that your father is rewriting his estate plan to give more to his new wife. It’s another to stand in the doorway and physically block your father’s lawyer from entering, to prevent dad from signing the revised papers.