Tackling the Tax Deadline with Zen
The April 15th tax filing deadline is just around the corner and if you haven’t started preparing your return, now is the time to get started! Many people associate completing a tax return as an arduous task but the following recommendations can help you reduce your stress as you file your return.1. Be proactive in gathering tax documents.
Have you stashed away a tax form to review at a later date or forgot to save a receipt? You’d be surprised how many people wait until the last minute to file taxes, only to realize they can’t find a document.
- Forms needed to file a tax return: besides the standard W-2, 1099, and 1040SE that most people use to file a return, new this year for seniors age 65 and older is the 1040-SR.
- Receipts (includes medical expenses, rental property expenses and investment loss reports).
- Income earned documents (includes property sale or investment capital gains).
Whether you decide to do-it-yourself or hire a finance expert to complete your return, keep these tips in mind:
- For the do-it-yourselfers, the more complicated your tax return, the easier it is to make a mistake that could raise a red flag so for accuracy, it’s best to double-check your work.
- If you hire a finance professional, organize and provide all necessary paperwork to the professional you hire to file taxes on your behalf.
- The most significant change to the tax law was to the standard deduction. Single filers can now claim $12K, and married individuals filing jointly can claim a $24K deduction.
- If you’re considering itemizing, make sure that what you’re deducting can still be deducted as the new laws eliminated many of the more previously popular deductions. If it works for your situation, you can strategically bunch allowed deductions into one calendar year.
- If you file an extension for your return, you’re still required to pay any money you owe to the IRS by April 15, or you will be subject to fees and penalties.
A couple of points to how new tax laws affect retirement include:
- IRA Contributions: Under the new tax laws, if you’re under age 50, you can contribute up to $6K, and if you’re over 50, you can contribute up to $7K. April 15 is the last opportunity to make 2019 tax-deductible contributions. If you’ve already filed, you can still make a contribution and then file an amended return.
- Effective Jan. 1, The SECURE Act removed the age limit to contribute to IRAs, as long as your income earned is at least as much as your 2019 contribution. If you already contribute to a 401(k), your IRA deduction may be limited based on your income.
- The SECURE Act raised the age for RMDs to now begin at age 72. Failing to take an RMD can be one of the costliest mistakes you can make, by facing a 50 percent penalty in addition to owing the taxes on the distribution. You can also be penalized if you fail to take the wrong amount so be sure to work with a qualified professional who understands the new tax laws.
Being proactive in preparing your tax return can go a long way in saving you time and money. If, after you send your tax return to the IRS, you notice a line of cars anxiously inching toward the post office on April 15 to make the midnight deadline, you take a deep relaxed breath knowing that your tax return is completed.
Securities offered through Kalos Capital, Inc. and Investment Advisory Services offered through Kalos Management, Inc., both at 11525 Park Woods Circle, Alpharetta, GA 30005, (678) 356-1100. Retirement Income Strategies is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.
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