Hello fellow taxpayers,
October 25, 2019 – SFS is gearing up for the 2020 tax filing season.
The 2020 tax filing season is almost here and we are readying ourselves for the onslaught. Now is also the time that you should start looking at your tax situation for 2019. Once December 31st is done and gone, it is too late (in most cases) to do anything to improve your 2019 taxes.
Two weeks ago, was the last of our major deadlines for extended individual tax returns (October 15th). Then I had to prepare for a speaking engagement in Anaheim to my fellow EAs and CPAs on several tax topics (Trusts and Cannabis Taxation – it is California, after all). And now that my Yankees are not in the playoffs (waah), I will be back on the ball. Go Yankees 2020!!! That also means that the 2020 tax filing season is almost upon us, and all of us at SFS have begun preparing for the season.
So here are a few pointers:
1) If you or anyone you know has not filed your 2016, 2017, or 2018 returns, the IRS turns off the ability to e-file any returns on or about November 15th. They do not turn it back on until mid-January (date to be announced in January). Then the 2016 return will have to be paper-filed as the IRS accepts the current year and the two previous. I have always preached if you can e-file a return, do it. It is better than paper filing. If you know of anyone that has back taxes (and I prepare almost as many back past due returns as current), pass this along, it would be appreciated.
2) Many of you found that you did not itemize last year. As such, those charitable donations, though a good practice to continue, did not provide a tax break. However, if you did itemize and you are planning on making a charitable donation, the donation has to be completed by December 31st. And remember to get those receipts now, not later.
3) Child and Dependent Care Credit – If you placed your child in after/before care, camp, etc., preparers like yours truly need the name of the provider, their address, Federal ID, and the amount paid for each child or dependent for each provider. You should ask the provider for this information before the upcoming holiday break.
4) If you sold a property, such as a rental, it is important to find out if you will owe taxes. For example, if you bought a rental property for $300,000 and owned it for ten years and you sold it for a net of $250,000. You may think that you sold it at a loss. However, since you took a depreciation deduction over the years you owned it, you really had a gain. Some of this gain is taxed like other income (“ordinary”), and some are capital. When the gain is computed, the resulting tax can come as a huge surprise. Now is the time to see me (or your tax professional) to calculate how the gain will affect you, tax-wise.
5) If you had a change in your life (death, divorce, marriage, children (new and those coming of age), college (with or without distributions from a §529 plan), this can have a significant impact on your tax return. Read our blog about life-changing events.
6) If you owe back taxes and have a payment plan in effect, any refund will be taken to pay off the debt, not reduce your payments. The same if you have an offer in compromise in for review. IRS will not distribute a refund if you owe them money.
Are you gearing up for the 2020 tax filing season?
There are many other reasons to get a head start now, but it is essential to plan ahead. It is not the preparer’s fault if your tax return comes out different than you think it would unless the preparer makes a mistake (yes, it does happen).
However, many of my colleagues and I find that clients do not communicate with us until January or later. And that is too late.
Contact us for a review. Book your appointment online or call the office 772-337-1040
This is just one of the reasons that I write these weekly emails, and send out newsletters — trying to keep taxes on the frontal lobe of your brain by giving you tips and hints.
So until next time,
Jeffrey “Getting Geared Up for the 2020 Filing Season” Schneider