A Little Tax Prep Goes A Long Way
Right now, you’re probably in holiday mode – planning your holiday get-together, buying presents and planning where you will spend New Year’s Eve. All of which are important tasks and require preparation. Just don’t overlook the importance of preparing to file your 2018 taxes. The 2019 tax season will be here before you know it.
Here are a few tips to help you get ready now to have a seamless experience and avoid any surprises when the time comes to file.
Perform A Paycheck Checkup
You only have a few pay dates left for the year, so it is imperative to check your withholdings as soon as possible. Due to Tax Reform changes, your refund could differ from prior year’s refunds ̶ if you even get one. In fact, some taxpayers might learn that they actually owe money to the government when they file their 2018 tax return. A paycheck checkup, might provide you with the insight you need to adjust your withholdings or make estimated or more tax payments throughout the year.
Also Read: Be on the lookout for tax return scams
Gather Documents
Before you step into your tax appointment, it’s important to have the necessary documents ready to go. These pieces include:
- Your 2017 tax return
- Year-end Forms W-2 from employers
- Forms 1099 from banks and other payers
- Forms 1095-A from the Marketplace for those claiming the premium tax credit
Confirming that employers, banks or other payers have your current mailing address or email address is an essential step. As a rule, these forms are available online or mailed at the end of January. One you have them, be sure to look over them carefully. If any of the information is inaccurate, contact the payer right away for a correction.
Be sure to keep a copy of filed tax returns and supporting documents for at least three years. Also, if you use a software product for the first time, you might need the adjusted gross income amount from your 2017 return to properly e-file your 2018 return.
Choose e-File & Direct Deposit For A Faster Refund
Choose e-File & Direct Deposit For A Faster RefundFiling your tax return electronically is the most accurate, simplest way to prepare and file. This tends to eliminate the errors that delay refunds. Tax prep software guides taxpayers through the process and performs all calculations. Adding direct deposit to your electronic filing is the fastest way for to get your refund – you needn’t worry about a lost, stolen or undeliverable refund check.
Being prepared and e-filing early can also help prevent tax return fraud. The sooner you file, the less likely a scammer can try to file with your information. It pays to get your return in first.
Also Consider
While planning for your return is a good practice, so is taking the following steps by Dec. 31 to help you out come tax time:
- Maximize your 401(k) contribution, which is $18,500 and an additional amount for taxpayers over 50+ – $6,000
- Make contributions to an education savings account or 529 Plan. The Ohio 529 plan amount is up to $2,500 per individual
- Use money in your Flexible Spending Account
- Pay real estate, state, and local taxes to deduct as itemized deductions in 2018, must consider AMT if applicable
- Be aware of the Alternative Minimum Tax
- Offset capital gains with capital losses
While this may seem daunting, this bit of preparation will help make your tax season a smooth one. Keep in mind; your CPA is here to help you through the process. Schedule your year-end planning meeting now. With all of the changes in the last year with regard to tax, it is more important than ever to have all of your ducks in a row.
By: Cindy Kula, CPA/PFS, CFP® (Cleveland)