The final few weeks of 2019 are upon us, but there’s still time to get on top of your tax preparations before 2020 rolls around and the January 1st to April 15th tax season begins. There are new laws to get accustomed to and a lot you’ll need to get ready for the tax deadline, so, with the New Year around the corner, there’s no time like the present to get started!
Here are six things to try and achieve before the end of 2019, that’ll make the upcoming tax season much easier:
Tip One: Get Yourself Organized
The more prepared you are to tackle tax season head on, the less stressful it’ll be. The best way to get prepared is to get organized, which means spending some time sorting out everything you’ll need.
Gather up all your expense and income sources and track down every receipt and document you already have and will definitely need and put them in one physical or digital place. It doesn’t matter whether you end up preparing your taxes alone or with the help of a professional, having everything you need on hand will save you a lot of stress
It’s never too early to get organized, but it can definitely be too late, so don’t take any chances and make sure that you’re organized before the New Year!
Tip Two: Stay Up to Date with Tax Regulations
Tax laws change a lot and it’s no different this year. If you haven’t kept up to date with changes throughout the year, now is the time to get reacquainted with your tax responsibilities, old and new. If you’re using a tax preparation service, then you’ll have an expert to talk you through the major changes brought in by the Tax Cuts and Jobs Act 2017, but if not, you’ll need to do some research.
For the 2019 tax year, there are three big changes to be aware of: the dental and medical expense deduction threshold has increased, there’s no longer a penalty for lack of health insurance, and alimony payments altered or established in 2019 are not deductible.
Staying compliant with tax law couldn’t be more important, so checking out the latest changes should definitely be on your list of things to do before 2020.
Tip Three: Plan Any Write-Offs
If you’re planning to invest money in new equipment or big purchases for your business, then you may be able to write them off and earn some tax exemptions. Just a little extra planning with expensive purchases could end up saving you a lot of money.
It’s not too late to start planning write-offs that can have a significant impact on your tax. However, it’s always best to talk to an accountant prior to making any expensive purchases to ensure that you’re getting the most benefit from your investment.
Tip Four: Take Advantage of Retirement Contributions
If you haven’t worked out a plan to max out your contributions to your retirement accounts, like your 401(k) or IRA, then it’s a great task to get out of the way before the New Year. It’s always best to max out your contributions if possible, as the more you contribute up to the limit in a traditional account, the lower your taxable income will be – plus the savings aren’t taxed when they’re withdrawn!
You could save thousands on your tax bill by sitting down and working out how much you need to increase payments by to max out your contribution. The 2019 limits for 401(k) contributions are $19,000 and $6,000 for catch up (over 50s), and for 2020 the limit will be $19,500 and the catch-up limit will be $6,500. For IRAs, the contribution limits are $6,000 and $1,000 for catch up in 2019 and 2020. Even if you can’t reach the contribution limits, it’s worth creating a plan to pay as much as you can.
Tip Five: Don’t Fall for Tax Scams
One thing to definitely avoid before 2020 – and for the duration of the tax season if possible – is tax scams. Tax scams are very common this time of the year, with many people receiving fake phone calls from the ‘IRS’ or from people promising them an unusually big refund.
Always do your research to ensure that you hire a professional tax expert – not someone just offering big refunds – and ignore any scam calls from people claiming to be the ‘IRS’. However, make sure that you never ignore the real IRS! If you’re receiving official letters from the IRS, you need to respond.
Tip Six: Hire a Professional to Help with Tax Preparation
The greatest tip of all when it comes to tax preparation and most tax-related things, is to hire an expert. There’s no requirement to hire a professional, and you may decide that you would prefer to do your own tax preparation, but there’s no substitution quite as beneficial as getting expert assistance. Instead of worrying about things like write-offs, tax reforms and retirement contributions, you can consult an expert and get an instant answer to your questions. A certified public accountant will be able to give you advice on tax changes, help prepare your taxes and assist you during the filing to make the whole process much easier.
Of course, you could wait until March or April to hire a tax professional… but then you’d be cutting it very close! Hiring a professional early will guarantee that there’s actually someone available to help you and you get the best price.
For expert advice preparing your taxes, contact the team at APA Financial Services. Our tax preparation and planning experts are available to support you with your taxes. We can help you to understand tax law, save money and manage your taxes with ease – taking all the stress out of tax preparation!
Get in touch with us today to learn more about our 2019 and 2020 tax preparation services in Chicago.