8 Things You Should Do To Prepare For The 2020 Tax Season
It’s hard to believe that the end of the year is upon us. If you are like most people, then you are probably focused on the holidays and spending time with family and friends. Taxes are the furthest thing from your mind. While it’s fine to take a few moments to focus on the finer things in life, at some point, you will need to consider your taxes. The sooner you think about them, the less stress you’ll have to deal with later.After the New Year, it won’t be long before tax season is upon us. To get ready for the 2020 tax season, there are eight things you can do now to prepare.
1. Get Organized
Having all of your tax information in one place that is easy to access will be beneficial when the 2020 tax season rolls around. You’ll have an idea of what your income and spending was, and you’ll be able to tell if you are missing any important documents. Getting organized will make the tax filing process go faster, smoother, and more accurately so that you can get on with your life.As part of your organization process, make sure you are holding onto receipts and other necessary documents to track your deductions. This could include medical bills, donations, local tax payments, travel expenses, mileage, or retirement contributions. It’s always better to have more documentation, so pull together everything you have and keep it in a file or folder that is easy to find and access.
2. Read Up on the New Tax Laws
With new tax laws taking effect, this could have an impact on how you file your return. To reduce the surprise and shock when you are getting your taxes done, take a few moments to read the new information. You may not be able to understand it all, but if you have a basic idea, you’ll know what questions you need to ask a tax professional so that you are aware of exactly how these new rules will impact you. Most importantly, make sure your accountant is up to date on these new laws.
3. Adjust Your Withholding
After you read about the new tax laws, you should then take the time to adjust your withholdings. In the past, many people were expecting to get refunds, only to find out that they owed because they weren’t having enough taken out of their checks. Don’t let this happen to you. If you are unsure how much you should be withholding, you can head to the IRS website for assistance or talk to a professional accountant.
4. Add to Your Retirement Account
In addition to checking your withholding amount, now is a good time to also look at your retirement accounts. Not only do you want to make sure that you have enough money to be comfortable when the time comes to retire, but adding to your retirement account comes with additional tax benefits. If you have a traditional retirement account, you can contribute to it without any tax penalties.
5. Plan Your Write-offs
If you know that you will be able to itemize or if you have business expenses that you can deduct, then it’s a good idea to start planning your write-offs in advance. Preparing your deductions ahead of time will not only save you the headache later on but also can assist you in making wiser purchasing options as the year comes to an end. For example, you can purchase and write-off new equipment costs instead of taking the depreciation method that is most often used. But first, to know that you are making the right decision, you might consider consulting with a tax professional.
6. Consider Your Liabilities
Liabilities can be confusing when it comes to your taxes. Whether you are expecting a year-end bonus or get high capital gains from a mutual fund, knowing this in advance will help you calculate taxes and what you may be expected to pay. Since you don’t want to get surprised with a high tax bill in April, taking this step now will help you prepare for the 2020 tax season.
7. Pay Your Taxes on a Quarterly Basis
To save yourself from potentially having to pay a considerable amount when tax season rolls around, you might consider estimating and paying your taxes every quarter. This could save you from any stress or surprises that may arise in April. It also allows you to plan for and make more affordable payments throughout the year.The best way to accomplish this task is to look at the previous year’s records, including the number of deductions, taxable income, and credits, among others you recorded. You also have the option of talking to an accounting professional to help with this step in the preparation process.
8. Work with a Professional Accountant
It has been mentioned several times throughout this article that you have the option of working with a professional. As a way to get prepared for the 2020 tax season, this may be in your best interest. Not only will they be able to answer any financial questions that you might have, but they’ll be able to tell you exactly what you’ll need to make filing your taxes pain-free, error-free and efficient.
It’s Never Too Early
You may not be focused on tax season at the moment, thinking that you want to get through the holidays first. However, time goes by fast, and before you know it, it will be April and time to file with the IRS. Don’t put off thinking about your taxes or getting prepared for the 2020 tax season for too much longer. The sooner you get this done, the less you have to stress about.One of the reasons taxes are so hard for people to deal with is because they don’t know what to expect. By getting ready now, you’ll have an idea if you have to pay or if you are owed. You’ll also know if you have all of the information you need to file your taxes accurately. If you don’t, you’ll have plenty of time to track down the documentation. Working with a tax expert and being organized is the best way to reduce stress and be prepared for the 2020 tax season, as well as those to come. At Bumgardner Morrison, we’re here to assist with your accounting services needs in Victoria, TX. Contact us today to schedule your consultation to get ahead of this tax season!
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