2. Think about paying 2021 bills right now
If your sources of income haven’t changed dramatically, you’ll most likely know if you’ll itemize or claim the standard deduction while filing your last year’s tax return.
However, if the plan is to itemize, the end of 2020 is the best time to prepay deductible expenses like state taxes that are due in January and mortgage payments. In fact, you can also take a closer look at your medical bills because, if you actually have enough unreimbursed medical expenses, you’ll most likely be able to deduct them.
This year, only those who have unreimbursed medical expenses that actually exceed 7.5 percent of their AGIs can actually deduct them; and this percentage is beyond reach for most Americans, however, if your medical expenses were pretty high in 2020 due to an unexpected health issue, you may be able to qualify.
