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June 2020

Tax Insights – June 2020 Rita Bhayani

Mid-Year Tax Checkup
As you complete your tax return this year, are you surprised by the amount of your balance due or refund? Many
people are unpleasantly surprised by the balance due. How can you prepare so that tax time is, if not pleasant, at
least less painful?
The choices you make regarding your federal income tax withholding and estimated payments can impact your
balance due or refunds. The IRS developed withholding tables to assist your employer in determining the correct
amount of tax to withhold from your paycheck. The good news is that you can change your withholding whenever
you want. By completing a Form W-4, you can take additional withholding each paycheck to minimize your balance
due. If you’re not great at saving, taking $50 out of each paycheck in the last half of the year is often easier than
coming up with $600 at tax time. In much the same way, you can make an estimated tax payment during the year.
This is helpful if you have extra cash during the year.
How do you determine how much to withhold or pay? Generally, taxpayers do not incur an underpayment penalty
unless they have a balance due (after deductions, credits, and payments) in excess of $1,000. We know the tax
rates for 2020. If you bring in your paycheck closest to July 1, you can double the income and withholding to get
approximate numbers for the full year. Together, we can go through your usual deductions and credits to determine
the amount that you must withhold to get to where you want to be.
Tax Notes
A health savings account (HSA) lets you set aside money on a pre-tax basis to pay for qualified medical expenses.
Following are the HSA limits for 2020 and 2021:
2020 2021

Maximum HSA
Contribution

Self-only: $3,550
Family: $7,100

Self-only: $3,600
Family: $7,200

Minimum HDHP
Deductible

Self-only: $1,400
Family: $2,800

Self-only: $1,400
Family: $2,800

HDHP Out-of-Pocket
Maximum

Self-only: $6,900
Family: $13,800

Self-only: $7,000
Family: $14,000

Tax Due Dates
• April and June estimated tax payments due – July 15
• Individual and C corporation income tax return due – July 15
Did You Know?
On June 14, 1777, the Continental Congress passed the first Flag Act, declaring that “the flag of the United States
be made of thirteen stripes, alternate red and white; that the union be thirteen stars, white in a blue field,
representing a new Constellation.” But it wasn’t until 1916 that June 14 was officially established as Flag Day.
Appleton, Wisconsin, home of the National Association of Tax Professionals, claims to have the oldest National
Flag Day parade, first held in 1950.
Quote Corner
“Success is not final, failure is not fatal: it is the courage to continue that counts.” ~ Winston Churchill
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Suchit Bhayani,
Aug 14, 2020, 2:24 PM
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