by Zanaida Wakatama
As of January 27, 2020, paper and electronic filings will now be received and processed, by the IRS, for refund or payment for this tax season. Before you rush to complete your taxes, let’s take a moment to make sure you have compiled necessary and pertinent information. Here are some suggestions to get you started.
Choosing the standard or itemized deduction - The standard deductions for 2020 are as follows: Married Filing Jointly- $24,800, Married Filing Separately- $12,400, Head of Household-$18,650, Single- $12,400. Choosing the itemized deduction is only advantageous if you have high mortgage interest, give an exceptional amount to charity or pay high state and local taxes. Unless the latter apply, the standard deduction is best.
Income from a job or contracted work- By now your employer or business for whom you worked as a contractor should have completed and sent out their required W-2s and 1099s. If you have not yet received your documents look forward to receiving them by mid February. Any delay beyond then should prompt you to contact Human Resources and if no response then contact the IRS for next steps to ensure that you enter accurate numbers to avoid penalization.
Childcare expenses- If you have qualifying dependents, child under 17 or disabled person, for whom you pay for childcare you may be eligible for a tax credit of $2,000 per qualifying child. A bit of information is needed from the childcare provider to properly report the expense on your return. From your provider you may have received or need to request documentation that states their employer identification number (EIN) or social security number, the duration of service and total amount paid. Services can be received from establishments, individuals as well as family members that are not parents and live outside your home. Care provided only while you were working and not by a nanny or personal assistant can be reported.
Record keeping- Whether you’re tech savvy or old school decide on a consistent format for saving your tax information. Choose a cloud platform to scan and upload your documents or take out the trusted manila folders to add your documents as you receive them. You will refer to either your actual or virtual folder when you are ready to reference them during the tax preparation process. A copy of the accepted return from the IRS should be added to the “folder” later for safekeeping.
Once you’ve decided on your record keeping format and compiled all of your paperwork, go to a trusted tax preparer or office to file your 2020 tax return. You may visit the IRS website to locate businesses in your area. Tax returns are to completed by Wednesday, April 15, 2020. Happy Filing!
Later issues will cover additional tax topics. What kinds of tax or financial topics would you like covered?
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