Wednesday, January 15, 2020

Tax Strategies for the New Year

While you may not have the total amount your household will spend on taxes, you can prepare for them throughout the entire year. There are strategies that can save thousands of dollars and your time by preparing for your taxes year-round. These tips can work for both state and federal taxes.

Records Organization

Gather your previous year’s tax return, 1099s and W-2s for the current year, receipts, and anything else you need for tax time. This will save you the time of locating all of these documents. Using a checklist will help you to keep track of the items that you need to prepare your taxes. Take the time to find the correct forms to file your taxes.

Retirement Accounts

Fund your retirement account ahead of the tax filing deadline for traditional IRAs and Roth IRAs.

Estimated Tax Payment

Making an estimated payment by the 15th of January can help you to eliminate penalties from the fourth quarter. You will owe a penalty for other quarters if you have not sent estimated payments for them at the time.

Itemize Deductions

The standard deduction is easier to take but it is possible to save more money by itemizing your expenses if you own your home, have a high tax rate, or are self-employed. Charitable donations and mortgage interest are well-known deductions. Portions of medical expenses over 10 percent of adjusted gross income can also be deducted.

Home Office Deduction

Make sure to examine the home office deduction closely. The rules for eligibility have changed, so be sure to run through the necessary qualifications closely.

File on Time and Electronically

It is imperative that you file your taxes and pay any taxes owed on time in order to prevent penalization. Filing electronically can save you on processing time as well as getting any refunds issued up to a month earlier.

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