Now is the perfect time to start preparing for the upcoming tax season. Here you’ll find some great tips from Brian Payne, CPA. Brian is a Supervisor at McGill, Power, Bell & Associates, LLP and specializes in accounting and tax planning for small to mid-sized businesses. He also has extensive experience preparing complex corporate and individual tax returns.
1. Take the time to consider any lifestyle changes over the past year which may affect your return. Examples: additional dependents, marriage, divorce, change of primary residence, etc. SALY (same as last year) can cause you to lose deductions and credits.
2. If you are going to owe money, pay the balance due and/or get your returns filed before April 15. An extension does NOT provide you with an additional 6 months to pay any balances due. If you wait until September or October to pay your balance due, you will be accessed interest and penalties.
3. If you are self-employed, consult your tax professional to ensure that you are taking advantage of the qualified business income deduction. Enacted in the 2018 Tax Cuts and Jobs Act, this deduction could be up to 20% of your business income if your return is being filed properly.
4. Consider making retirement plan contributions to lessen your total tax. A contribution made prior to April 15 of 2020 may be deductible on your 2019 return. Check with your accountant and financial planning professionals to ensure that all deductible retirement contributions are being shown on your returns.
5. Don’t forget about the tuition credits! If you have a dependent on your return who is in college, you may be eligible to claim tuition credits (even if the student files a tax return of their own). The student should receive a 1098-T from their college’s bursars office in January of 2020. These credits can be worth up to $2,500 per student.
6. If you aren’t sure whether your returns are being prepared properly (especially with the major changes enacted last year), don’t be afraid to ask a professional for help. Many firms (including MPB) will review prior year returns to verify whether credits or deductions have been missed. If something has been done incorrectly, amended returns can be filed to claim refunds.
A few additional thoughts to keep in mind this tax season include developing an organizational system for important documents that will be needed for taxes, and considering the use of technology, such as QuickBooks, Excel, or Outright. Following these tips will help prepare you for the upcoming tax season.
This article was published in the Venango Chamber’s January 2020 VenangoWorks! Newsletter.