Here Are Your Articles for Tuesday, February 25, 2020
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Getting Ready for Tax Time

 

What can you do now before you meet with your tax preparer? With a bit of forethought and preparation, you can make this year's taxes go as smoothly as possible.

Actually, there's no grand secret to filing taxes in an easy and efficient manner; it's simply a matter of setting a system of organization and sticking to it. An old shoebox, while compact and useful, is not the most effective system for holding your financial information in an easy-to-access manner.

Keeping track of receipts. Even if you don't get a single write-off for receipts, it's well worth your time to keep them in logical order. There are plenty of programs that let you scan receipts and organize them on a computer or tablet. Or if you don't like a digital system, a notebook and glue stick can work.

The benefits of keeping receipts are twofold: You can find any receipts if they're eligible for tax purposes and you'll have the receipt if something breaks.

File paystubs and invoices. It's worth getting slightly more technical if you're going to take your taxes seriously. When you end up paying an unusually large tax bill or receiving a large return, you need to find out what caused it. You'll usually discover that the withholding was off all year.

Check the IRS tax withholding tables. If you leave your W-4 as is, you can wind up withholding too little, which can bring penalties. Track your income and the tax that comes out on a monthly basis. This information is right on your paystub. Put it into an Excel file and compare it to the tax bracket and rate you should be paying. This will prevent nasty shocks — you'll be able to adjust withholding early to avoid a larger, year-end discrepancy between what you should have been paying and what you were paying. File a new W-4 to make changes.

This is especially important this year, as the IRS has issued a radically new Form W-4. Filling out a new one is not mandatory (unless you're starting a new job), but it may be wise. Be sure to bring a recent paystub with you so your tax professional can advise you on filling out a new form.

Life Changes

Did you have a child in the new year? Get married or divorced? There is a whole range of life changes that should automatically prompt you to make tax-related changes, including a marriage, a divorce, the birth of a child, a second job and a new house. These changes will affect you whether you are a regular employee or a contract worker. Be sure to organize all your W-2 and 1099 forms.

There are also new rules on retirement accounts, regarding minimum distributions. Some of these changes could affect your estate plan, as laws have changed regarding inherited retirement plans. So bring any statements or paperwork you received regarding IRA, 401(k) or similar plans.

Finally, bring last year's tax returns with you. This is especially important if you did your own taxes last year, or worked with another preparer.

In the long term, get serious about keeping organized records, watching your withholding, planning your deductions and reviewing your tax return. If you do, when tax season comes each year, it will be more bearable and easier to handle. Prepare your questions and concerns for when the answers to your tax questions surface. Hit the ground running!

 

 
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Coulter & Justus, P.C.
Coulter & Justus, PC
(865) 637-4161
9717 Cogdill Rd, Suite 201
Knoxville, TN 37932
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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