With the 2019 tax season coming to closure, you might be happy to forget about taxes again for another year. But if you do it, you would be making next year’s tax season quite difficult for yourself.
You might file a tax return just once a year, but taxes affect you all through the year. Now, by understanding this and starting to prepare for the taxes now, you can make tax season 2020 a really smooth ride.
Here are some of the steps you must take to get all set for the next tax season.
Deciding Whether To Adjust The Tax Withholding
When you are an employee, the government takes a cut of the earnings from each paycheck. The amount it deducts usually depends on how much you earn and how much tax allowance you have claimed.
The more allowance you claim, the less money the government would tale from the paycheck. Generally, single adults tend to claim one or more allowances, while working parents might claim more.
When you claim more allowances, the paychecks become larger, but the tax refund check might be smaller. This is mainly because the amount you pay through the year is closer to the tax liability.
You surely don’t want to claim more allowances than you actually should, else you might owe taxes at the year-end.
Talking to experienced accountants can surely help since they would be able to offer better assistance.
Setting Up A System To Track All Deductible Expense
This applies to self-employed individuals who might need to deduct office expenses and travel expenses as well as other business-related costs on the taxes.
However, there are other deductions that any person can qualify for, such as medical expenses that exceed more than 10% of the adjusted gross income. This is the income minus certain tax deductions for 2019 as well as charitable contributions you have made to churches or non-profit organizations.
To make things easier, it is better to set aside a folder for the receipts and all paperwork that’s related to tax deductions so you have them at one place when dealing with tax season 2020.
If you think you aren’t confident enough, it is always better to hire accounting professionals for more assistance.
Plan Up For Estimated Taxes When Self-Employed
Usually, self-employed workers must pay taxes quarterly as they don’t have regular paychecks the government can withhold taxes from.
Now, failure to pay estimated quarterly taxes might result in a penalty. So, if you were self-employed in 2018, the 2018 tax return must indicate how much you should pay in each quarter based on the 2018 earnings.
However, you need to set aside more or less when you expect the earnings to be either high or low in 2019. If you pay the amount suggested on the 2018 return, you wouldn’t get hit with a penalty even if you earn more this year.
Get Familiarize With The Latest Changes In Tax Laws
Each year, the government loves to tinker with the tax laws. However, the tax brackets often change and so does the value and qualifications required for tax deductions.
Even though you don’t need to understand all tax rules, but is no doubt better to familiarize yourself with the key changes that might affect you in 2020.
Hiring skilled accountants would help since they are well accustomed with all the tax rules and the changes.
You must remember that the taxes would be enjoyable. Moreover, if you lack proper knowledge, it can often become a nightmare. If you don’t want that, you must hire trained professionals to help you.
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