What could happen to the step-up in basis and estate tax depending on what state you live in and how you vote in the upcoming presidential election? Before you take drastic action to change your tax plan, Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.

Highlights/Topics:

I’m a computer engineer in California with a 350k salary. This year, I got an extra bonus of about 100k and received 70k short-term capital gain from investment. Is there anything I can do by the end of this year to still save on tax? Yes, maximize your retirement plan contributions and offset capital gains by harvesting capital gain losses

Our beneficiary IRAs become self-directed (SD) IRAs to purchase rental properties. We are retirement age, but don’t have to take required minimum distribution (RMD), yet. Our goal for this year is to pay 12 percent taxes on AGI. That percentage may increase in future years. Can we convert the SD IRAs to Roths? There is no limitation as far as age is concerned to convert a traditional IRA into a Roth IRA; if you have an RMD, then you have to pay the RMD before converting the traditional into a Roth IRA

I am a high-income earner and have a short-term rental in service for 12/2020. In order to take advantage of tax benefits, would you recommend cost segregation this year and use losses toward active income? A short-term rental does not always go on Schedule C; substantial services must be provided to short-term tenants and average stay must be seven days or less or will go on Schedule E

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Resources:

Tax Toolbox (aba.link/TaxToolbox) (Only $595, Regularly $1,500)

http://aba.link/taxtoolbox

Neuro Diverse Living (NDL) Inaugural Fundraiser and Silent Auction (ndl2020.org/silentauction)

http://ndl2020.org/silentauction

Here's where Biden and Trump stand on your taxes

https://www.cnbc.com/2020/10/20/heres-where-biden-and-trump-stand-on-your-taxes.html

Tax Cuts and Jobs Act (TCJA)

https://www.irs.gov/tax-reform

St. Louis Federal Reserve Economic Data (FRED)

https://fred.stlouisfed.org/

Individual Retirement Arrangements (IRAs)

https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras

Traditional and Roth IRAs

https://www.irs.gov/retirement-plans/traditional-and-roth-iras

Wills and Trusts

https://andersonadvisors.com/living_trusts/

Bonus Depreciation

https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act

Depreciation Recapture

https://www.investopedia.com/terms/d/depreciationrecapture.asp

Credits and Deductions

https://www.irs.gov/credits-deductions-for-individuals

Capital Gains and Losses

https://www.irs.gov/newsroom/capital-gains-and-losses-10-helpful-facts-to-know-0

Cost Segregation

https://www.irs.gov/businesses/cost-segregation-audit-techniques-guide-chapter-1-introduction

Conservation Easement

https://www.conservationeasement.us/what-is-a-conservation-easement/

Real Estate Professional Requirements

https://www.irs.gov/pub/irs-utl/33-Real%20Estate%20Professionals.pdf

MileIQ

https://www.mileiq.com/

Home Office Deduction

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

Self-Employment Tax

https://www.irs.gov/taxtopics/tc554

1099 Form

https://www.irs.gov/pub/irs-pdf/i1099gi.pdf

Puerto Rico Tax Incentives (Act 20 and 22)

http://puertoricotaxincentives.com/

Charitable Organizations

https://www.irs.gov/charities-non-profits/charitable-organizations

HUD

https://www.hud.gov/

CARES Act

https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf

Old Age, Survivors, and Disability Insurance (OASDI)

https://www.investopedia.com/terms/o/oasdi.asp

Schedule C

https://www.irs.gov/forms-pubs/about-schedule-c-form-1040

Schedule E

https://www.irs.gov/forms-pubs/about-schedule-e-for