Income tax season is in full swing. The IRS began accepting 2019 returns at the end of January. Even though you have until April 15 to file your return, it is smart to start preparing much earlier.
2020 Tax Season Dates
- January 31 – You should have received a W-2 form from your employer by the end of January. If you have done any contract work, you might have also received a 1099-MISC form. If you haven’t already received your forms, contact your HR department right away.
- April 15 – This is the official income tax return deadline. If you need more time to file your taxes, you can request a six-month extension. It’s important to remember, however, that you still need to pay what you owe on time to avoid any late penalties or interest charges.
- June 15 – If you aren’t currently living in the United States, you still need to pay your taxes by April 15. However, you are automatically given a two-month extension to physically file with the IRS. Any taxes that aren’t paid on time are subject to interest charges.
- October 15 – If you requested a six-month extension, this is the filing deadline.
Quarterly Tax Deadlines for 2020
If you opted to pay your 2019 income taxes in quarterly installments, the due dates are as follows:
- Payment 1 – April 15, 2020
- Payment 2 – June 15, 2020
- Payment 3 – September 15, 2020
- Payment 4 – January 15, 2021
2019 Tax Changes
There are a few changes to keep in mind when preparing your tax return.
- Income tax brackets were adjusted slightly from the previous year to account for annual inflation. If your income remained the same from 2018 to 2019, you could save a few dollars.
- There is no longer a penalty for not having health insurance. In 2018, the penalty was $695, but that penalty has been removed for most people. There are still a few places where health insurance is required, however. Massachusetts, Washington DC and New Jersey will still impose a penalty if you don’t have coverage.
- Standard deductions increased from last year. If your filing status is “single”, your standard deduction has increased by $200. If your status is “married filing jointly”, your deduction is $400 more than in 2018.
- In 2019, the threshold for the deduction of medical expenses has been increased. In the previous year, you were allowed to deduct any unreimbursed medical expenses that were 7.5% above your adjusted gross income (AGI). For 2019, however, you can only deduct those unreimbursed medical expenses if they exceed 10% of your AGI.
Items That Have Stayed the Same in 2019
A few rules that changed in previous years are still in effect for your 2019 taxes.
- Child tax credit – The $2000 tax credit for each qualified child, which was implemented in 2018, hasn’t changed. Income limits for receiving the credit are $400,000 for joint returns and $200,000 for individual returns.
- Mortgage deductions – The maximum mortgage principal for allowing this deduction is still $750,000. If your existing mortgage before 2018 was between $750,000 and $1 million, however, you can grandfather in the older deduction.
- 539 plans – You can still use these plans for college and other educational expenses.
Other Deductions
If you opt-out of using the standard deduction, you will be able to deduct some of your other expenses.
- Form 1098 – A statement showing the mortgage interest that you paid during the year will be mailed to you by your mortgage lender.
- Annual giving statements – Most charities that you have given to throughout the year will send you a receipt once they have received and processed your gift. If you make a contribution online, you may receive an email confirmation of the gift. Each receipt should show the amount and the date it was received. You must tally all of the receipts to include in your deductions. It is also important that you haven’t received any goods or services in exchange for your contribution.
- Childcare expenses – Your childcare provider should send you a statement showing the total expenses you have paid for the year.
Avoid Procrastinating
Now that you are aware of the various dates and deadlines, as well as some of the changes implemented in 2019, it’s important to get started preparing your tax information as soon as possible. The earlier you file your income taxes, the quicker you will receive your refund. Whether you prepare your taxes yourself or seek the help of a professional, it makes things easier if you use last year’s tax information as a point of reference. It will help you to compile a list of documents and receipts you will need this year.
Finding a Professional
The task of preparing and filing your income taxes can seem daunting. You may worry that you will forget to include important information or that you will make a mistake that could cost you a great deal. The right tax consultant, in addition to preparing your return accurately, will guide you in the following tasks:
- Reduce your chance of being audited
- Avoid penalties and late fees
- Keep your tax information safe from potential theft
- Ensure that your retirement plan isn’t compromised
- Avoid paying more taxes than needed
- Keep your small business safe from litigation by an employee who says their taxes weren’t reported properly
Even after you have decided to find a professional, it can be hard to know where to begin. Having peace of mind in knowing your taxes are done accurately is so important, but finding someone who is competent and reliable is difficult. You can search online for tax accountants in your area, but it’s impossible to know which firm has your best interests at heart. You also don’t want to exhaust your bank account during the process.
Utilizing a source such as United CPA Association can take the guesswork out of filing your income taxes. The association can compare several accounting firms in your area using data criteria to help you find the right fit, while making sure to steer you away from unqualified firms or those that have received unfavorable reviews. Only legally registered firms with an impressive number of clients will be considered. In order for a firm to remain in good standing, all complaints from customers would need to be resolved quickly to the satisfaction of the client. Loss of membership can result if a firm fails to meet these high standards.
Choosing a qualified tax professional can be a difficult task, but using the right tools in finding one will make your decision a whole lot easier.
