Now that 2019 is over, individuals and businesses will have to get ready for the upcoming tax filing deadlines. Here are a few tips to help make it easier for both you and your accountant:
1. Complete your 2019 tax organizer to make sure you don’t forget anything. It serves as a great reminder. Didn’t get an organizer? You can call or email us!
2. Make sure to keep track of your charitable donations either in cash or in-kind. It’s best to keep your donation receipts to substantiate the deductions you are claiming.
3. Contribute to your retirement plan. It’s not too late to make a contribution to your retirement plan. This is a complicated topic so, if you have any specific questions, please call or email us.
4. If you receive anything in the mail that says “Important Tax Document Enclosed”, chances are it is very important. Please don’t ignore it. It could be a government form such as a 1099, 1098 or W-2 which are needed for your tax filing.
5. If you have a business and you pay vendors (excluding corporations) for services that amount to $600 and above, you will need to issue a Form 1099 by the end of January 2020. This also includes payments to attorneys and medical providers even though they are corporations.
On another note, in December of 2019 Congress approved some tax extenders. Tax extenders are a term used to refer to expired or expiring tax provisions. These extenders tend to be short-term, some might have expired in 2017 or 2018 and now Congress is bringing them back and extending through 2019 or 2020. Here are some of the popular deductions that were part of the tax extenders in 2019:
1. Mortgage insurance premium or PMI – This deduction expired at the end of 2017. However, Congress renewed this deduction retroactively and extended this deduction through 2020.
2. Medical expense deduction floor – Medical expense deduction floor was 7.5% for 2017 and 2018. It was supposed to go up to 10% in 2019 but now Congress extended the 7.5% floor through 2020. This means that you can deduct medical expenses that are over 7.5% of your adjusted gross income.
3. Qualified tuition and related expenses deduction – This deduction expired at the end of 2017. However, Congress amended the provision to extend it through December 31, 2020. This deduction allows taxpayers to claim an above-the-line deduction for qualifying education expenses without having to itemize.
4. Exclusion of COD (Cancellation of Debt) for primary residence mortgage debt – This provision was renewed retroactively for 2018 through 2020s. Taxpayers are allowed to exclude from their gross income any COD from qualified principal residence indebtedness.
Unfortunately, Congress did not reinstate the unreimbursed employee expenses that used to be deductible under Schedule A. In addition, the caps on state and local taxes (SALT) remained unchanged.
If you have any questions or need help getting ready for your 2019 taxes, we are here to help. We are all excited and geared up to make sure you all get the most deductions and tax benefits you deserve.