Tips for Preparing Your Taxes in 2020
It's hard to believe, but tax season is already here. The IRS began accepting returns for 2019 on January 28th, 2020 and will accept returns until April 15th.
In this blog, we'll go over some simple tips to make sure your filing goes as smooth as possible, while maximizing your return.
Think about Itemizing Your Return
It may be more time consuming when filing, but itemizing your tax return could unearth some more money that finds its way onto your return. The standard deduction for the 2019 year is $12,200 for a single filer and $24,400 for married joint filers.
However, if you have mortgage interest, medical expenses, or charitable contributions you've made through the year, you may find that your itemized deductions add up to be more than your standard deduction. If that's the case, it's worth the extra time to itemize your taxes to get back more on your return.
Organize Your Records Ahead of Time
It can get extremely frustrating to be unable to find crucial information when filing your taxes. Before you start, make sure you have the correct forms like the W-2 and 1099. You'll also want to make sure that you have receipts for any charitable contributions you may have made throughout the year, as well property taxes, and retirement contributions if you choose to itemize your taxes.
Having all your files in one place will make your tax preparation painless. The faster you get taxes done, the faster you'll have your return!
There are many advantages when it comes to filing your taxes electronically. If you use tax-filing software, it likely will not let you file your return if you leave a required field blank, unlike a mailed-in form. The IRS will also acknowledge that it received your electronic filing, which is not something they do if you send in a paper version.
Best of all, filing your return electronically will result in getting any refund you may be eligible for potentially quicker.
Maximize Your Tax-Free Contributions
Making sure that you are contributing the most money possible to things like your 401(k), IRA, or HSA will make your tax bill lower. Qualified contributions are tax-deferred, and lower your taxable income for the year. It could even be the difference in which tax bracket you land.
There is still time to catch up your contributions as well. Tax-deferred contributions for 2019 can be made up until the filing deadline on April 15, 2020. As an added bonus, those contributions compound tax-free, leaving you with more money for retirement.
Look out for Scams
Maintain your skepticism when it comes to strangers asking about your taxes. The IRS will only contact you via certified U.S. mail unless you are involved in litigation with the IRS. They do not contact you via phone or text message demanding more money. Scammers commonly ask for payment via a prepaid gift card that will be impossible to trace once transferred.
You should also be skeptical of any tax preparer promising a larger refund. There is no magic way to increase your refund, and the IRS will not be fooled into giving you a larger return by a tax preparer. Check the IRS Directory of Registered Tax Preparers to make sure any tax professional you choose to work with is certified and trustworthy.
Put Your Return to Work with Consumers Credit Union
Consumers Credit Union has a number of ways you can put your tax return to work for you. Our Smart Saver Accounts let you stash your extra cash away with a 2.00% APY, allowing your return to grow. Open a Smart Saver account today and earn more money on your savings.