Ready to file your 2019 taxes? (Or not?) Don’t stress: Here is my roundup guide to help the filing process be a little less painful:
Know Your Limits
Do you know where you fell last year on the tax brackets? If not, you can find the 7 brackets here via the IRS website.
Here are some other limits you might need to know:
- The 2019 standard deduction is $24,400 for married filing jointly, $18,350 for heads of households and $12,200 for single taxpayers
- The Alternative Minimum Tax exemption amount is $71,700 for 2019, and begins to phase out at $510,300. It is $111,700, for married couples filing jointly and begins to phase out at $1,020,600.
- The child tax credit is now available for more families, as the income limits have increased. The credit phases out at $200,000 for modified adjusted gross income, or $400,000 for married couples filing jointly. That’s up from $75,000 for single filers or $110,000 for married couples filing jointly. The credit is $2,000 per qualifying child under age 17, if they are claimed as a dependent and live with the taxpayer for more than six months out of the year.
Gather Your Documents
Even if you hire an accountant to file your taxes, you know there is plenty of document gathering involved ahead of time. Here are some of the important documents to track down:
- Income
- W-2s
- 1099s (for interest, dividends and contracting work)
- Roth Conversions
- Schedule K-1 for partnerships
- Potential Deductions
- Taxes you’ve paid – real estate, state & local, & personal property
- Student Loan Interest – 1098-E
- Mortgage Interest Statement – 1098
- HSA Distributions/HSA Contributions
- Charitable Contributions
- Home Improvement – Energy Efficient Deductions
- Form 1098 for interest and expenses paid on a mortgage
- Qualifying childcare expenses so that parents can work
- Other
- Health Insurance 1095-A
Make Your Contributions
It might be 2020, but did you know you still have time to make contributions that apply to your 2019 taxes?
One of these is your IRA, which you can contribute to until July 15th in 2020. In a typical year, that limit is April 15th. You can add money to either your traditional or Roth IRA, but remember that only traditional IRAs are tax-deductible. If you want to cut down on your tax bill, you can do so by contributing to your traditional IRA – just remember they are subject to income limits.
Health Savings Accounts (HSAs) can also be contributed to right up to the tax day deadline. When you contribute to these accounts, just be sure to specify you’re adding money for the 2019 calendar year, so it applies to your 2019 taxes.
Assess What You Owe or Receive
Were you surprised by your refund last year? The changes from The Tax Cuts and Jobs Act went into effect, and the average taxpayer saw around a 16 percent smaller refund than in years past.
If you did end up owing money to the IRS, here are some quick tax tips to avoid that next year:
- Watch your deductions. You might want to opt for the standard deduction instead of itemizing. The 2017 tax laws capped state, local and foreign property taxes and income taxes at $10,000 annually, or $5,000 for married people filing separately.
- Increase withholdings. If you owe the government money at tax time, it means you did not pay enough out of your paychecks. Adjust your withholdings so you pay more, and you will have a lower tax bill next year. Don’t forget to change your withholdings to reflect life changes, like moving, getting married or divorced, or having a child. You can use the IRS withholdings calculator for extra help here.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.