Five Tips to Help with Tax Preparation This Year

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While taxes probably aren’t the first thing you think about in January, the beginning of a new year also marks the beginning of a new tax season. The IRS recently announced that January 27 will be the official first day of the tax season for this year.

In other words, this will be the first day that you can file your 2019 tax return. The deadline for filing your 2019 return is April 15, which falls on a Wednesday this year. So this means you’ve got a window of approximately 11 weeks to file your return.

Start Preparing Now

Regardless of whether you’re an early bird who likes to get your taxes done as soon as possible or a procrastinator who waits until the last minute, now is a good time to start preparing. Here are five things you can do to make the tax filing process go smoother this year.

  1. Pull out last year’s tax return. This can serve as a good refresher of the documents and paperwork you used when filing last year. It also includes standard information you’ll need such as Social Security numbers and other personal information for yourself, your spouse and your dependents and bank account numbers so you can receive your refund via direct deposit.
  2. Gather income documents. These will detail all the taxable income you earned last year. For most people they include: 
  • W-2 forms substantiating wage income.
  • 1099 forms detailing income from freelance work (1099-MISC), interest (1099-INT), dividends (1099-DIV) and broker or barter exchange transactions (1099-B).
  • Schedule K-1 that reports each partner’s share of earnings, losses, deductions and credits from a partnership. 
  • Form SSA-1099 listing Social Security income.
  1. Organize documents substantiating deductions and credits. Tax deductions can reduce your taxable income, thus lowering your overall tax liability. You must itemize deductions on Schedule A when filing your return to benefit from most, but not all, deductions. Tax credits are even better — they reduce your tax liability dollar-for-dollar. You should gather documentation to substantiate deductions and credits like:
  • Contributions to retirement plans (Form W-2)
  • Educational expenses (Form 1098-T) and student loan interest (Form 1098-E)
  • Mortgage interest and property taxes (Form 1098)
  • State and local taxes paid (Form W-2)
  • Charitable contributions (statements from charities or cancelled checks)
  • Medical bills (itemized receipts)
  1. Gather documents substantiating tax payments. If income taxes are withheld from your gross pay each pay period, the total amount of income taxes you paid during the year will be included on Form W-2. But if you’re self-employed and made quarterly estimated tax payments during the year, make sure you track down this documentation so you can substantiate these payments to the IRS.
  2. Gather documents related to self-employment income. If you are self-employed or run a freelance, contracting or consulting business on the side, you may need to file Schedule SE along with Form 1040 to report your self-employment income. Each client from whom you earned at least $600 last year is required to send you a 1099-MISC form detailing how much money they paid you.

Note, however, that if a client didn’t send you a 1099-MISC form, this doesn’t mean you don’t have to report that income. Therefore, you should keep careful records and documentation of all self-employment income you earned throughout the year.

Also keep records and receipts of all deductible business expenses you incurred throughout the year so you can easily access them at tax time. For many self-employed individuals these include computers and software; office furniture and equipment; advertising and marketing expenses; vehicles and miles driven for work; and travel, meals and entertainment related to the business (up to certain limits).

File Your Return Electronically

The IRS encourages all taxpayers to file their returns electronically and choose direct deposit of their refund in order to expedite processing and receive refunds faster. This option is “fast, accurate and the best way to get your refund as quickly as possible,” said IRS commissioner Chuck Rettig in a statement.

Please contact us if you have any questions as you prepare to file your 2019 tax return.


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