As we start tax filing season 2020 I thought it might be a good idea to go over some mistakes that are easy to make when filing your return. All won’t apply to you but one might save you money.
“Tax simplification” was one of the big selling points of the tax law passed in late 2017 that first affected our returns filed in 2019 for the 2018 tax year. One of the biggest simplifications came because the Standard Deduction was doubled, and that caused many more taxpayers to use the Standard Deduction instead of going through all those tax, medical and charitable contribution receipts to Itemize. If you’re used to itemizing, you probably are also used to including your state tax refund as income. However, if you did not itemize on your 2018 return, your state refund is not included in your 2019 income, even though you received a 1099-G from your state Department of Revenue.
As we go into the new year, many of us take a look back and see what we want to change in order to live more fully. Maybe it’s eating better, exercising more, quitting a bad habit…. Focusing on our health and wellbeing is important - and so is taking the time to get our finances in shape. What do you want to achieve this year and in the future? And what steps should you take to get there?
It may seem like an unusual holiday present, but when you think about it, what could be more satisfying than financial security and freedom? And who better to receive it than you! This year, give yourself a gift that will keep on giving: financial planning with the assistance of an experienced professional.
Does the thought of itemizing make you break out into a sweat? Where is that hotel receipt from October 2? What about the equipment invoice from July? While you don’t need receipts and documentation to file taxes, you will if you are ever audited (which happens when the IRS detects red flags, as well as randomly). Whether you opt to streamline your tax preparation by claiming the standard deduction or this amount is greater than the total of individual deductions - you may believe that you have few additional benefits available to reduce your tax bill. The good news: this is frequently not the case.