Tax Planning

Saving more in taxes requires tax planning during the year.

The 2020 CARES Act applies for 2018, 2019, and 2020 taxes, and TCJA returns in 2021. Therefore, traders must use CARES for 2020 tax preparation and TCJA for 2021 tax planning. A new Biden administration and Congress in 2021 might enact tax legislation that changes some tax planning strategies; stay tuned for updates.

TCJA did not change trader tax status, Section 475 MTM, wash-sale loss rules on securities, and more. But there are many things to consider, including 2021 inflation adjustments in income and capital gains tax brackets, various income thresholds and caps, retirement plan contribution limits, standard deductions, and more. See the 2021 Tax Brackets at TaxFoundation.org.

For more information, see Green’s Trader Tax Guide, Chapter 9, Tax Planning.