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5 Tips For An Easier Tax Season

Tax Season

When is the official tax season? The 2019 tax season is January 1st through April 15th and involves the preparation of the documents and financials for 2018. Learn how to avoid the typical stress during this period with our 5 tips for an easier tax season.    

When To File Your Taxes

The Internal Revenue Services (IRS) has not yet released their date of when they will accept tax returns but dates have previously been on or after January 29th. If you have all your documents prepared and ready to file beginning January 1st, you may provide them to a tax professional so they will submit them when the systems are officially open and ready. If you are unable to meet the deadlines, you may file for a 6-month extension by completing the IRS Form 4868.

Create a Tax Preparation Checklist

Tax Season

Now that we know when to file taxes, let’s utilize a tax preparation checklist to help you get organized. The goal is to gather all relevant documents and have a system of order so that when you go to your accountant, you are ready. Tax filing can be easy if you take the right steps early on. The last thing you want is to have ongoing appointments or have to spend extra time doing your taxes.

Personal Information

You will want to have social security numbers available for yourself, spouse (if married) and any dependents (if applicable).  Having your taxes from the previous year are great to keep handy in case there are any discrepancies, or if you would like to review once again.

Income

W-2’s – Collect all W-2’s from employers for each person stated in the personal information section that are collecting income. You should receive your W-2 from your employer by January 31st.

W-2’s – Collect all W-2’s from employers for each person stated in the personal information section that are collecting income. You should receive your W-2 from your employer by January 31st.

1099’s– Forms for any contract work, investment earnings, dividends or broker transactions. For more forms in this section, refer to the IRS website.

Taxable income can include various items such as real estate sales, lottery winnings, casino winnings etc. you can find a full list on the IRS Publication 525.  

If you are a small business, you will need to also gather costs of goods sold, office supplies, rent, mileage, expenses, asset purchases, professional fees, advertising, any changes that have occurred in the business.

Adjustments To Your Income

Adjustments to your income are expenses that will lower your gross income. Documents to collect include retirement accounts, 401 k contributions, traditional IRA’s, Health Savings Accounts and various others depending on your employment situation and contributions.

Tax Deductions and Tax Credits  

Tax deductions will provide a percentage saved depending on the tax bracket you are in. For example, If you are in a bracket that requires you to pay 32% taxes and you have a deduction of $1,000, you will save $320.

Documents that you will want to collect include charitable donations, medical expenses, gambling loss, property taxes, home mortgage interest, investment interest expense, local income taxes and other miscellaneous deductions.

Tax credits can help reduce your liability but instead of providing a savings of the tax bracket percentage, you save on every dollar. Applicable documents include those that involve dependent child care expenses, child adoption, purchasing your first home, in home office expenses, American opportunity, caring for an elderly parent or disabled person, lifetime learning, energy credits, savers credit and earned income credit.  

Get To Know The New Tax Laws

Review the new tax laws for your year of return. In the 2018 Tax Reform, there were changes to the tax brackets and income ranges. Standard deductions were nearly doubled as well as the child tax credit. Personal and dependent exemptions were eliminated along with the tax penalty for not having health insurance (after December 31, 2018). A limit was set for state and local property, income and sales tax to $10,000. Some of these changes will occur for your 2018 tax return and others will be for the future. Try not to burden your mind with these changes but simply review them so that you are in the loop while connecting with your accountant.

Understand Your Deadlines To File

As stated previously, the last day to file an income tax return is April 15th with the possibility to file a 6-month extension by filling out the appropriate forms. Filing a trust and estate tax return, C-corporation return, Foreign Bank Accounts Return will also have an April 15th deadline. Partnership and S-Corp returns have a March 15th deadline. Each of the returns above have various extensions to file. Failure to file can happen to the best of us. Life can get in the way and expenses add up. If this happens to you, contact our San Diego Attorney office to walk you through the next steps.

Schedule Your Appointment With A Tax Accountant

Don’t wait till the last moment to schedule an appointment with a tax accountant. Set it far enough before the deadline so if you have additional appointments or documents to find, you have enough time to do so.

Tax season doesn’t have to be stressful. Having an attorney by your side will not make the experience fun, but it will make things considerably easier for you.

Posted in: Corporate Law, International Tax, Tax Planning

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