Year-end planning: Get ready for the upcoming tax filing season by doing these things.
As tax filing season approaches, there are several things that you should do before the end of 2019. This article outlines several year end tax planning items that all taxpayers should do to prepare themselves for the upcoming tax filing season.
Make Charitable Donations
If you plan to itemize your deductions in 2019, you still have time to make a charitable contribution. Remember that due to the new Tax Cuts and Jobs Act (“TCJA”), the standard deduction has increased. In 2019, the standard deduction is $12,200 for single and married filers filing separately, $24,400 for married filing jointly and $18,350 for heads of household. The increased standard deduction may limit your ability to claim itemized deductions.
Report an Address Change
The IRS reminds taxpayers who moved in 2019 to notify the IRS of their new address. Typically, address changes are made when you file your tax return. Simply include your new address on the return, and the IRS will update their records. The IRS also reminds taxpayers to notify the Social Security Administration (“SSA”) if they have changed their name.
Renew Expiring ITINs
Certain individual taxpayer identification numbers (“ITINs”) expire at the end of this year. Your ITIN will be expiring on December 31, 2019 if you have not used it at least once in the last three consecutive years on a federal tax return. If the middle digit of your ITIN is 83, 84, 85, 86 or 87 and you have not already renewed, your ITIN will also expire at the end of the year. If you fit within either of these situations, and you intend to file a tax return next year, you need to renew as soon as possible.
Taxpayers can contact Porter Law Office, LLC, a Certifying Acceptance Agent for the IRS for more information about renewing your ITIN.
Connect with the IRS
The IRS has several ways to connect with taxpayers. The IRS has a social media page that contains its Twitter feed, YouTube videos, podcasts and other platforms that may be helpful to you. On these pages, you will find information on tax changes, scam alerts, initiatives, tax products and taxpayer services. And, these tools are available in different languages, including English, Spanish and American Sign Language.
Of course if you still have questions after reviewing this information, you can contact Porter Law Office, LLC.
Retirement Plans
There is still time to make a contribution to your workplace retirement accounts. You are allowed to make a contribution into an IRA for 2019 until April 15, 2020. The basic limit for 401(k) contributions in 2019 is $19,000, plus an additional $6,000 for individuals who are at least 50 years old.
Also, you may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. Starting in 2018, if you’re the designated beneficiary you may be eligible for a credit for contributions to your Achieving a Better Life Experience (“ABLE”) account.
The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA or ABLE account contributions depending on your adjusted gross income (reported on your Form 1040 return). The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly).
Example: Jill, who works at a retail store, is married and earned $38,500 in 2019. Jill’s husband was unemployed in 2019 and didn’t have any earnings. Jill contributed $1,000 to her IRA in 2019. After deducting her IRA contribution, the adjusted gross income shown on her joint return is $37,500. Jill may claim a 50% credit, $500, for her $1,000 IRA contribution.
For more information, see the IRS’s year end tax planning information regarding retirement plans.
Tax Refunds
You will typically receive a refund faster when you e-file your tax return and use direct deposit. The IRS issues most refunds within 21 days, but there are many factors that could make your refund take longer. Some returns require additional review and take longer to process. If you claim the earned income tax credit or additional child tax credit (two commonly claimed refundable credits), the IRS is prohibited by law from issuing refunds before mid-February. This delay is so the IRS has more time to detect and prevent fraud.
Finally, you should be careful not to expect getting a refund by a certain date, especially when planning major purchases or paying other financial obligations.
If you wish to discuss your particular year end tax planning, contact Porter Law Office, LLC today.
Contact an Experienced Ohio Tax Attorney
Columbus, Ohio Tax Lawyer
If you have tax questions, contact the experienced tax lawyer at Porter Law Office, LLC. For any other IRS or state of Ohio tax controversy, contact the experienced Columbus, Ohio tax attorney at Porter Law Office, LLC today for a consultation to discuss your particular IRS tax needs and options.